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NEW PRINCIPLES 


ON THE SUBJECT OF 


POLITICAL ECONOMY, 

. V - r > v' ' I .V . ' 

EXPOSING THE FALLACIES OF THE SYSTEM OF 


FREE TRADE, 


AND OF SOME OTHER DOCTRINES MAINTAINED 


IN THE “ WEALTH OF NATIONS.” 


/ 

y 

BY JOHN RAE. 


When we reason upon general subjects, one may justly affirm, that our speculations can 
scarce ever be too fine, provided they be just.— Hume, Essay on Commerce. 


BOSTON: 

HILLIARD, GRAY, AND CO. 

1834 . 


A 













/ v, 





Entered according to the act of Congress in the year 1834, 
by Hilliard, Gray, & Co. 

in the Clerk’s Office of the District Court of the District of Massachusetts. 







. 

- \ 1 V ! ■ V ' » 

,• ; " v. * | 


J. D. FREEMAN, PRINTER, 
NO. 110, WASHINGTON STREET. 


















PREFACE. 


[The work here presented to the American reader, was composed with the 
intention of being published in Great Britain; under this idea the following 
Preface was written. As it explains the design of the original undertaking, 
it has been thought proper that it should retain the place it was at first intend- 
ed to occupy.] 

To promote prosperity within, to guard against danger from 
without, have ever been esteemed the two great branches of the 
duty of the Statesman. But of all the sources of internal prosperity, 
or means of repelling external aggressions, no one, in modern times, 
is of greater efficacy than wealth. We have, therefore, no reason 
to be surprised, that statesmen should have endeavored to procure 
for their respective countries the greatest possible amount of it. If 
the laws they have enacted, and the regulations they have for this 
purpose established, have really answered the ends they were in- 
tended to promote, they are certainly praiseworthy. 

Of the efficacy of such laws, for those purposes, politicians for 
a long time did not doubt; but a great revolution in public opinion 
has taken place, and almost all men who now pretend to understand 
the principles that should govern the policy of nations, agree in 
condemning them. 

This revolution in the opinions of men, had its rise in France. 
It might have died there, however, with the sect from which it had 
birth, had not a man of surprising genius, placing himself at the 
head of the feeble party then supporting it, enabling them to give 
their principles currency throughout the nations of Europe. Adam 
Smith will be recorded among remote generations, as one having 
powerfully influenced the opinions and policy of the civilized world, 
during the eighteenth and nineteenth centuries. His great work no 
sooner appeared in Britain than it was read, and the opinions it 
maintained adopted, by every one who pretended to any knowl- 
edge of the important subjects of which it treated. It quickly, and 
with like success, spread through other lands. Never was the 
force which mere intellect possesses more strikingly manifested. 


IV 


PREFACE. 


To illustrate his speculations, to cast them into new forms suited to 
the varied tastes of various nations, became an employment by which 
men of undoubted genius thought themselves honored. His rea- 
sonings are the basis of numerous systems and innumerable essays. 
A voluminous library might be formed of the works of men who 
call him master. Nor were the dicta of a retired student acquiesced 
in, and embraced, only by theorists like himself. They have 
guided the councils, they have formed the text book of statesmen, 
and have had an important influence on the policy of nations. 

Against doctrines supported by so great a weight of authority, 
what, it may be demanded, can possibly be urged ? and how comes 
it, that so obscure an individual as the author of the following 
pages, places himself in opposition to them ? Custom authorises 
me, — in a measure calls on me, — in answer to these questions, to 
state to the reader how I was led to form opinions opposed to this 
system, and why I bring those opinions before him. 

Many years ago, I became engaged in a series of inquiries into 
the circumstances which have governed the history of man, or, to 
vary the expression, into the causes which have made him what he 
is in various countries, or has been in various times. It seemed to 
me, that, by gathering together all that consciousness makes known 
to us of what is within, and all that observation informs us of what 
lies without, the real agents in the production of the great events 
by which the fortunes of our race have been diversified, might be 
at least partially discovered, the laws regulating their procedure 
traced, and that thus the materials for a true Natural History of 
man might be reached. The pursuits in which I was engaged led 
me to the subject on the side of physiology, and what is termed 
metaphysics, and imagining that I saw a ray of light struggling 
through the obscurity of the objects, amidst which these inves- 
tigations placed me, I began to conceive hopes of being able to 
dispel some of the darkness, in which are involved causes that have 
produced, and are producing, results of the highest importance to 
us. To this pursuit I determined to devote myself. Such a reso- 
lution would scarcely have been taken by any one unless prompted 
by the enthusiasm natural to youth, and would not have been 
adopted by me, had I not had the prospect of enjoying every facility 
in following out the objects I had in view; but a sudden and unex- 
pected change took place in my circumstances, and I exchanged 
the literary leisure of Europe for the solitude and labors of the 
Canadian backwoods. I found, notwithstanding, that this accident 
could not altogether put a stop to my inquiries, though it retarded 
them and altered their form. 


PREFACE. 


V 


I had early turned for assistance to the Inquiry into the Nature 
and Causes of the Wealth of Nations, and to the speculations of 
the political economists. But, I found their scope and design too 
confined, to advance the attainment of my purpose in the degree I 
had anticipated, and I had besides the mortification of perceiving, 
that the conclusions to which they led, were, in many points, 
opposed to those at which I had arrived. Encountering opposition 
where I had looked for support, I applied myself to ascertain, if 
possible, the cause, and, after having spent considerable time in 
the inquiry, conceived I had detected enough of fallacy in the spec- 
ulations, even of Adam Smith himself, but more especially of his 
successors, to warrant the belief that my conclusions might be right, 
though the practical rules that might be deduced from them, would 
not coincide with those laid down in what is termed the science of 
political economy. But, though I became satisfied on this head, it 
was not my intention to have directly attacked any of the tenets of 
the school. Setting out from a new point, it seemed to me, that, 
however far I might advance, it would not be necessary for me 
directly to oppose, or to attempt to controvert, any received opin- 
ions; 

During my residence in this country, the field of my inquiries 
being much contracted, I again recurred to the disquisitions of 
Adam Smith, and of other European writers of the same school, in 
order to trace out more fully than I had hitherto done, the connex- 
ion between the phenomena attending thp increase and diminution 
of wealth, and those general principles of the nature of man, and of 
the world, determining, as I conceive, the whole progress of hu- 
man affairs. Though I was led to this study, simply from my desire 
to advance, as far as my situation permitted me, in a path of inves- 
tigation which had, to me, a very lively interest, my prosecution of it 
had the effect of impressing me more deeply with a conviction of 
the unsoundness of the system maintained in the Wealth of Nations. 

In this stage of my progress I became engaged in a work on the 
present state of Canada, and on its relations with the rest of the 
British Empire, These relations seem to me to spring from the 
mutual benefit arising to the colony and the empire from their con- 
nexion. The sect of politicians, to whom I allude, deny that any 
such benefit arises to either party. Were their reasonings correct, 
it would follow as a necessary consequence, that Canada is, in this 
respect, of no advantage to Great Britain, and would go far to 
prove, what, indeed, seems by many to be believed, that the sooner 
the connexion between them is dissolved the better. 

Dissenting as I do, from the opinions of these theorists, it ap- 


VI 


PREFACE. 


peared to me, that the work I had undertaken required me to state 
some of the reasons on which I grounded this dissent, and that, 
withont entering at length into any of the important questions 
involved in the discussion, I should be able at least to cast a shade 
of doubt over doctrines asserted with great dogmatism, and acted 
on with unhesitating confidence. In endeavoring, however, for 
this purpose, to arrange a series of arguments drawn from a modifi- 
cation of principles that originally suggested themselves to me 
when engaged in more enlarged inquiries, my work gradually 
assumed a far more extended and systematic form, than I had at 
first meditated, and I became engaged in the present attempt, to 
show that there exist great and radical errors in the whole system, 
sufficient to vitiate very many of the conclusions drawn from it, and 
from the fallacies introduced by which, the doctrines of free trade 
alone derive their plausibility. 

In the prosecution of the argument, I have almost entirely con- 
fined myself to the consideration of the doctrines to which I am 
opposed, as they are developed in the Wealth of Nations. I could 
not have done otherwise, without becoming involved in the discus- 
sion of contradictory and conflicting opinions. Neither, as I con- 
ceive, is this limitation of essential importance to the determination 
of the points in debate. If Adam Smith be essentially wrong, 
none of his followers can be right. The system established by him 
stands, or falls, with him. 

I am not ignorant of the dangers to which this attempt subjects 
me. Whoever ventures to attack a system received so generally, 
and supported by so great a weight of authority, is exposed to 
various evils. They who have embraced its principles are apt to 
slight and neglect, or, if that may not be, to conceive it their busi- 
ness to overthrow the heterodox doctrines. What of error they 
may contain is eagerly seized on, what of truth, is overlooked. 
“ Who,” asks Mr. Locke, “is there, hardy enough to contend with 
the reproach which is ever prepared for him, who dares venture to 
dissent from the received opinions of his country and party? And 
where is the man to be found, that can patiently prepare himself to 
bear the names, that he is sure to meet with, who doth in the least 
scruple any of the common opinions?” Though many things are 
altered since the days of £ocke, mankind are but little changed. 
In his days, indeed, the prejudices of the times ran towards 
opinions, which, acquiesed in by many succeeding generations 
were, therefore, conceived to have a real plurality of judgments in 
their favor. Now, on the contrary, to have been believed from of 
old, is deemed to indicate defect, and that alone is admitted as of 


PREFACE. 


Vll 


approved strength, which has not been .subjected to the test of time. 
In this, nevertheless, there is a perfect agreement, that men appeal 
not so much to truth itself, as to prevalent opinion, and are disposed 
to treat whatever stands opposed to it, as necessarily erroneous. It 
were, then, in vain for me, I am aware, in reply to the charge of 
presumption in challenging the opinions to which the celebrated 
author of the Wealth of Nations has given currency, to answer, 
that it is not so, and that, on the contrary, “he is the general chal- 
lenger : ” that his disciples form, in reality, but a sect, one setting 
itself in opposition to the belief of all preceding ages, and in its 
rise and progress presenting nothing dissimilar to the other numer- 
ous sects, which time, in its course, has seen appearing and disap- 
pearing : that, therefore, if we really appeal to authority, its deci- 
sion is against, not for, the present political creed. Such arguments 
would certainly fall on deaf ears. The authority, in which men 
acquiese, is that which is present, and to which they have been 
accustomed to yield assent. Whatever is opposed to this, and 
separated from it by distance of time or space, has no influence 
on their judgments. 

But, although, instead of assistance, I have to look for opposition, 
from this quarter, I nevertheless believe, that I have an auxiliary 
of great power on my side. In political questions, before they see 
that they are wrong, it is common for men to feel that they are 
so. The progress of recent events seems to have excited a general 
sensation of this sort over Great Britain. Twenty or thirty years 
ago, according to the prevailing political system, every circumstance 
in the condition of the empire was at variance with what should 
give prosperity to a state. To meet the enormous annual expendi- 
ture occasioned by the most wasteful of all preceding wars, a reve- 
nue as enormous was drawn by taxation from the people, while, 
instead of their industry enjoying the boasted advantages of perfect 
freedom, at home it was restrained by regulations of old established, 
and abroad its products were legally shut out from every continental 
port, and could only any where force an entrance with much 
hazard, and at heavy expense. 

True ; making its power felt through the element that had ever 
been most propitious to it, it had subjugated almost every spot on 
the globe, colonized by Europeans, and by this means, in defiance 
of its enemies, maintained an extended commerce with all parts of 
the world. But this vast extent of empire, preserved by force of 
arms, and at great expense, according to the dicta of modern politi- 
cians, was an evil of the greatest magnitude, and one which, though 
the burden attending it is now reduced to comparative insignifi- 


Vlli 


PREFACE. 


cance, they are continually assuring us we ought, as quickly as 
possible, to get rid of. 

Notwithstanding all these disadvantages, however, there is no 
period in its history in which the condition of Great Britain was 
apparently more flourishing. The exertions of the laborer were 
liberally rewarded, the expenditure of the capitalist richly repaid. 
Every thing gave token of rapidly increasing wealth and abun- 
dance. 

The triumph of that cause, in aid of which war had been em- 
braced, gave peace to the empire and to Europe. The annual ex- 
penditure was diminished by one half, and the nation was no longer 
restrained, but in comparatively a very trifling degree, from partici- 
pating in all those advantages, which, in every instance, one 
country, according to prevailing notions, • is supposed to gain by 
free intercourse with another. But, though markets for the manu- 
facture, and channels for the commerce of the kingdom were largely 
multiplied, its resources, instead of augmenting, seemed diminish- 
ing. The whole fabric of society seemed ready to sink under the 
pressure of some new burden, — ruin began to threaten, often to 
overwhelm the man of capital, — want to look industry in the face. 
In vain were taxes to a large amount repealed, in vain were endea- 
vors made to trace the depression of the times to mere revolutions in 
the channels of trade, and to other temporary causes, and hopes held 
out that they would speedily pass away. The evil proved to be not 
partial and temporary, but pervading and permanent. Far from 
confidence in the modern science being shaken by a result con- 
trary to all its principles, it was resolved to seek a remedy for the 
acknowledged distress, by adopting largely the policy which this 
science inculcates. 

It cannot be denied that the results of the experiment, as far as 
it has hitherto been carried, have been in the whole, unhappy. 
The events which have followed, not to say flowed from recent 
enactments, regulating the internal and external commerce of the 
nation, have been at least unfortunate. The operations of the 
banking system, and the extension of general confidence and secu- 
rity in all transactions, which that system is calculated to afford, 
seem clogged and restrained. The returns which industry and 
capital receive, have been still farther diminished. Wealth is bar- 
ren. Labor, plied with all the skill, and more than all the assiduity 
to which human nature is long adequate, does not always keep 
famine at a distance. 

It is natural that these circumstances should beget a sort of feel- 
ing of doubt. That, without pretending to question the general 


PREFACE. 


IX 


truth of the system established by Adam Smith, many should yet 
ask themselves, is the path which he has pointed out, truly that 
which always leads directly to the wealth of nations? In this 
temper of the public mind, I am inclined to hope that the applica- 
tion of new principles to a reconsideration of the whole subject, 
may be conceived to be an undertaking deserving, at least, of be- 
ing examined, and that the defects of the following pages may not 
be thought sufficient to prevent what measure of truth they may 
contain, from being perceived and appreciated. 

Montreal, 1833 . 


POSTSCRIPT. 

In the preceding pages, the reader has an explanation of the 
original design of the work which I venture to place before him ; 
but, in preparing it for publication in this country, I have made 
some alterations in it, the nature of which it is proper I should 
here state. 

The doctrines which Adam Smith maintained with so much 
ability, never took so deep hold in this country as in England, and 
they have been more strongly opposed. There is, hence, a very 
considerable difference between the state of public sentiment in 
Great Britain and America, concerning the most interesting practi- 
cal questions of political economy. This is especially the case 
with regard to the policy of the protective system. The practical 
bearings of that system on the condition of things in this republic, 
have been discussed so often, and with so much ability, that proba- 
bly few new arguments or facts concerning it can be brought for- 
ward by any one, least of all can they be expected from a foreigner. 
Although, therefore, I look on the effects of the policy pursued by 
the legislature of the United States, as affording the best practical 
illustration hitherto existing of the correctness of some of the prin- 
ciples I maintain, I have scarcely at all referred to them for that 
purpose, but have contented mfyself with showing how the benefits 
resulting from the operations of the legislature, in this and in other 
similar cases, arfe to be accounted for. I have thus omitted much 
matter that would have appeared, had the work been published in 
England, but which, it seemed to me, would be at least superfluous 
here. These omissions occur in the third book, which is conse- 
quently much abridged. 


B 


X 


PREFACE. 


To the second book I have made some additions, having given 
fuller developement to the principles there explained, and traced 
their connexion with events at greater length, than is necessary 
for the mere purpose of exposing the fallacies of the theoretical 
views, the refutation of which was originally my sole design. As 
the additions were made m the progress of the work through the 
press, in one or two instances I have been led to refer to subjects 
to be afterwards treated of, which I found it impossible to Comprise 
within such limits as would admit of their insertion. These omis- 
sions, however, do not occasion any break in the chain of reasoning. 
There are, also, some topics, which, though I have introduced, I 
have but partially discussed, and merely so far as may serve to 
show some of their connexions with principles expounded. The 
most important of these is the subject of banking. 

Boston, 1834 . 


I 

TABLE OF CONTENTS 

AND SUMMARY OF PRINCIPLES. 

' » 


General Introduction ■ • • • . & 1 

BOOK I. 

\ 

Individual and National Interests are not Identical. 

The causes giving rise to individual and national wealth, are not 
precisely the same. Individuals grow rich by the acquisition of 
wealth previously existing ; nations, by the creation of wealtli that 
did not before exist. 

Introduction ... 7 

CHAPTER I. 

Of the identity of individual and national interests con- 
sidered as a simple principle «... 9 

CHAPTER II. 

Of the Identity of Individual and National Interests Con- 
sidered as a Theoretical Principle ... 32 

BOOK II. 

Of the Nature of Stock and of the laws governing its in- 
crease and diminution. 

The first ten chapters of this Book treat of the nature and opera- 
tion of the causes originating and increasing Stock ; the eleventh 
and thirteenth, of the nature and operation of those which retard the 
increase of Stock, or diminish the amount of it already existing ; 
and the twelfth and fourteenth, of the combined actions of the 
former and latter causes. The last chapter consists of an examin- 
ation of the claims of the principles of Adam Smith to the rank 
of Science. 

Introduction ...... 78 


* 


' CONTENTS, & C. 


5di 

CHAPTER I. 

It is characteristic of man to provide for the wants of the 
future, by the formation of instruments ; and his power to 
make this provision, is measured, by the extent and accura- 
cy of his knowledge of the course of natural events 80 

CHAPTER II. 

Of the circumstances common to all instruments, and of those 
proper to some . . . . . 01 

There are three circumstances common to all instruments. 1. They 
are formed, or receive a capacity to produce certain events fitted 
to supply future wants, by labor, eithei directly or indirectly. 

2 Before their capacity is exhausted, and they pass from the 
rank of instruments to that of materials, they yield a return, or 
produce certain events fitted to supply future wants, which may 
be estimated in labor. 3. Between the period of their formation 
and that of their exhaustion, a space of time intervenes. 

Some instruments can be easily moved from place to place, others 
cannot. The former are termed goods, or commodities. 

CHAPTER IJJ. 

Of certain circumstances arising from the Institution of Soci- 
ety . . • . . . 95 

Statement of some generally admitted principles concerning the 
nature of man and of society, which it is necessary to assume in 
the progress of the subsequent investigations. 

CHAPTER IV. 

Every instrument may be arranged in some part of a series, 
of which the orders are determined, by the proportions ex- 
isting between the labor expended in the formation of in- 
struments, the capacity given to them, and the time elapsing 
from the period of formation to that of exhaustion 100 

CHAPTER V. 

Circumstances determining the amount of instruments formed 109 
In every society considerably advanced in art, that is to say, in every 
society the members of which have acquired an extensive know- 
ledge of the trains of events supplying the wants of man, which the 
materials they possess are capable of generating, there is no assign- 
able limit to the capacity that may be given to these materials, or 
to the amount of events which the instruments that may be formed 
out of them may bring to pass ; but, that capacity cannot be in- 
definitely increased, without carrying the stock of instruments 
owned by the society to an order of slower return, — that is to say, 
without extending the period between their formation and ex- 
haustion, or diminishing their return. It so happens, that, other 
circumstances being equal, the wider the circle of events embraced, 
the returns made by the instruments constructed take place in a 
more distant futurity, 

\ 


/ 


CONTENTS, &C. 


CHAPTER VI. 

Of the circumstances which determine the strength of the 
effective desire of accumulation 

The order to which the instruments formed by any society will be 
earried, is fixed by the relative estimation by its members, of events 
taking place at present, and at a future period, which is denomina- 
ted the effective desire of accumulation. This is chiefly determin- 
ed, 1. by the distinctness of the minds conception of future events, 
which again depends on the strength of the intellectual powers ; 2 . 
on the desire felt for the production of practicable future events. The 
latter circumstance is regulated by the strength of the moral pow- 
ers, or what in those investigations are termed the social and be- 
nevolent affections. As the existence of the individual is preca- 
rious, and his power of enjoyment continually diminishing, the 
more the state of feeling and action pervading any community sep- 
arates individuals from one another, the more limited will be the 
range of events, which the effective desire of accumulation of the 
members of that community will embrace. On the contrary, as, 
though individuals perish, the race remains, the more the interests 
of the individual are identified with those of others, the wider will 
be the circle of events which the accumulative principle will com- 
prehend. Isolation of feeling and action weakens the accumula- 
tive principle by separating the interests of individuals, and so 
contracting its sphere of operation ; community of feeling and 
action strengthens it, by connecting the interests of individuals, 
and exciting them to comprehend within the circle of their opera- 
tions a more extended series of events. 

CHAPTER VII. 

Of some of the phenomena arising from the different degrees 
of strength of the effective desire of accumulation in dif- 
ferent societies ..... 

The state of feeling and action, the consequent strength of the ef- 
fective desire of accumulation, the orders of instruments and 
some of the circumstances thus produced among hunting and pas- 
toral nations, in the Chinese Empire, in Modern Europe, and 
among the ancient Romans. 

CHAPTER VIII. 

Of the division of employments, and of other phenomena 
produced by efforts to accelerate the exhaustion of instru- 
ments ....•• 

When, in consequence of the progress of art, and the strength of 
the accumulative principle, there are many extended trains of 
events, or arts, going on in any society, and when, consequently, 
there exist many sets of tools or instruments producing them, each 
individual betakes himself to the production of some particular 
train, and to the formation of the instruments necessary for carry- 
ing it on. By this means, no instruments lie idle, which must be 
the case were every man to practice several arts, and, consequently , 


XIV 


CONTENTS, &C. 


they are more speedily exhausted, and pass to, orders of quicker 
return. This division of employments introduces the necessity of 
the exchange of commodities. The exchange of commodities is 
regulated, by the labor respectively expended on them, in con- 
junction with the time at which it was expended, reckoning the 
effects of the latter by the orders at which instruments actually 
stand. The existence of exchange occasions a choice being made 
of some commodity, which is kept for the purpose of being ex- 
changed with all others, and so comes to name the rates at which 
they exchange, or to fix their values. The commodity chosen for 
this purpose is termed money, and, among communities possessing 
the precious metals, consists of them. Exchangesjare also effected 
by means of credit. The modern art of banking consists in a 
generalization of all credit transactions, and an emission of paper 
money, or money of credit. Its introduction into any community 
by facilitating the exchanges of instruments, quickens their ex- 
haustion, and carries them to the more speedily returning orders.* 

The general prevalence of credit, and of the use of money, has 
produced the mercantile mode of calculating the returns of in- 
struments, by profits and interest. 

CHAPTER IX. 

Of the effects resulting from diversities of strength in the ac- 
cumulative principle, in members of the same society 198 

In the same society, instruments are kept at nearly the same orders, 
because prodigals, or individuals in whom the accumulative prin- 
ciple is weaker than the average, can exchange the instruments 
they possess for more, according to their estimation of the future 
and the present, than they are worth, and therefore transfer them ; 
while frugal persons, individuals in whom the accumulative prin- 
ciple is stronger than the average, find exercise for it in acquiring 
instruments transferred by prodigals. Exception to this rule con- 
cerning instruments that cannot be exchanged, forming a stock 
reserved for immediate consumption. 

CHAPTER X. 

Of the causes of the progress of invention, and of the effects 

arising from it .... oqq 

Invention, the discovery of new possible existences, becomes an active 
principle by exerting a formative power on old actuul existences. 

The causes exciting its progress, 1. in the nature of man the in- 
ventor, the same in general as those giving strength to the 
accumulative principle ; 2. in the nature of the world in 
which he lives, change exposing to his view new successions of 
events, exciting him to observe them, and weakening the retarding 
influence of the principle of servile imitation. The effects on 
instruments of the progress of invention, are, to produce improve- 
ments in them, and to carry them on to orders of quicker return. 

One of the final causes of the changes and revolutions of all sorts, to 

* See also note G . 


/ 


I 


l 


CONTENTS, & C. XV 

which man and art arc subject, seems to be, to advance the inven- 
tive faculty. — Of stock absolute, and relative, and its subdivisions. 

CHAPTER. XI. 

Of Luxury ...... 265 

PART I. 

There is a propensity among men to attain superiority over one 
another. This may be termed vanity, and is gratified by the evi- 
dent possession of things which others have not the means of 
acquiring ; and therefore by the possession of commodities of 
which the consumption is conspicuous, and which cost much labor, 
though not better qualified, or, though but little better qualified to 
supply real wants, than other commodities costing little labor. The 
comparison of the physical qualities of such commodities does not 
afford, therefore, the means of measuring them by one another. 

Hence the assumption, on which the preceding investigations have 
proceeded, (p. 93) that all commodities compare with one another 
by their physical qualities is incorrect. In so far as any commodity, 
when compared with another, excels it only in the gratification it 
affords to vanity, it is to be considered a luxury, in so far as it 
compares with others in the capacity which its physical qualities 
give it to gratify real wants, it is to be considered as a utility. The 
progress of invention and improvement have no effect in carrying 
instruments, directly or indirectly producing luxuries, to more 
quickly returning orders ; on the contrary, they carry them to the 
most slowly returning orders of which the strength of the accumu- 
lative principle admits the existence. The labor expended in the 
formation of luxuries, is so much direct loss to the community, 
one man’s superiority being here equivalent to anothers inferiority. 

The amount thus dissipated depends on the force of the social and 
benevolent affections, and intellectual powers, as compared with 
that of the selfish feelings, and is, therefore, inversely as the 
strength of the accumulative principle. 

PART II. 292 

Narcotics, in so far as their effects are not measured by the quantify 
consumed, may be classed with luxuries. A question concerning 
the effects resulting from their cheapness considered. 

CHAPTER XII. 

Of Exchanges between different Communities . 300 

Exchanges between societies, are not directly regulated by the 
quantity of labor expended on the commodities exchanged. In- 
creased facility in the exchange of utilities operates in the same 
manner as the progress of invention and improvement, and carries 
instruments to the more quickly returning orders; increased facility 
in the exchange of luxuries has an immediate tendency, on the 
contrary, to carry instruments to the more slowly returning orders. 

CHAPTER XIII. 

Of Waste . . . . • 312 

The loss which, in any society, the capacity of instruments sustains 


XVI 


CONTENTS, &C. 


by the operation of fraud and violence, seem to be nearly inversely 
as the strength of the accumulative principle ; but violence, as 
producing change, excites invention. 

CHAPTER XIV. 

Of the combined operation of the causes investigated in the 
preceding chapters . . . . 320 

Summary of principles, and account of some events arising from 
their combined operation. v 

CHAPTER XV. 

Of the “ Wealth of Nations ” as a branch of the Philosophy 
of Induction ..... 328 

i 

Adam Smith’s great work is to be considered as a philosophical sys- 
tem, the object of which is to explain known phenomena, on popu- 
lar principles, not as an inductive inquiry, leading to the discovery 
of the real laws determining the succession of those phenomena. 

APPENDIX TO BOOK II. 

Of the principle of the division of labor . . 352 

The division of labor ought to be considered rather as a result than 
a cause. 

BOOK III. 

Of the operations of the legislator on National Stock 358 

Introduction ...... ib 

Instead of there being any grounds for a presumption against legis- 
lative interferance, from the assumption, that nature ought to be 
allowed to pursue her own plans ; the presumption is, on the con- 
trary, that nature gave man his peculiar faculties for the purpose, 
that, universally, and as well here as elsewhere, he might acquire 
the direction of events, by discovering the laws regulating their 
successions. 


CHAPTER I. 

Of the operations of the legislator in bringing the arts of 
Foreign Countries to his own . . . 363 

The legislator may stimulate invention by the introduction of new 
arts. 

CHAPTER II. 

Of the operations of the legislator on luxuries . 369 

The art of the legislator may apply to the purposes of the state funds 
naturally dissipated in luxuries. 

CHAPTER III. 

Of objections to the interference of the legislator in the 
cases indicated in the two preceding chapters 377 

Notes . ' . . . . 387 


INTRODUCTION. 


Of all the circumstances connected with the “Inquiry 
into the Wealth of Nations,” there is no one more re- 
markable than the fact, that its celebrated author leaves 
us in doubt what he himself understands by that wealth, 
the nature and causes of which it is the object of his 
inquiry to investigate. His followers have scarce been 
more fortunate. They have sought, by definitions, to 
remedy the acknowledged defect, but have been unable 
to agree in the terms of them. The school is thus split 
into many little sects at variance with each other re- 
garding the very elements of the science.* 

It seems to me that this circumstance arises from, 
and very clearly marks the existence of, a great and 
fundamental defect in the principles of investigation 
on which Adam Smith and the school he founded pro- 
ceed; — an uniform tendency to hold that up as an ex- 
planation of other things, which, in reality, is the very 
thing itself to be explained. 

It is the nature of wealth in the general, and the 
laws regulating its increase and diminution, that can 
alone, as I conceive, form the proper subject of philo- 
sophical investigation. These being determined, from 
them may be deduced the manner in which particular 
societies, or particular individuals, come to possess this 
or that amount of wealth. But, though such is the 
proper philosophical view of the subject, it is not that 
under which it appears to common observers. 

* Vide note A. 

1 


2 


INTRODUCTION. 


Before men begin to speculate, they are obliged to 
act. They are therefore first led, in regard to any 
system with which they have to do, to fix their atten- 
tion altogether on the phenomena exhibited by it, with- 
out attempting to reach the causes of those phenomena. 
It is usually long after the events themselves have thus 
been observed and noted, that to trace their causes 
becomes the employment of philosophers. The mere 
sailor, for example, regards the winds simply as con- 
nected with the different seasons, the various regions 
of the globe, and the particular aspect of the heavens 
at the time. This makes up the sum of his knowledge 
concerning them, which, notwithstanding, may be very 
extensive and of great practical utility. It is not his 
object to inquire into the general causes producing all 
these phenomena, nor into the laws regulating the 
general system of things, of which they make a part, 
and so of ascertaining the true nature of the different 
winds, the real manner of their existence, and the 
measure of their force and duration. He believes that 
while that system endures as it is, his knowledge will 
serve to direct his practice, and this is all about which 
he concerns himself. An extensive practical knowledge 
of this sort here long preceded a philosophical know- 
ledge of the subject. It has been the business of the 
latter, as it has at last had place, to ascertain the nature 
of wind itself, and the causes producing all different 
winds, and acting on them. For this purpose the phi- 
losopher has turned himself to the investigation of 
whatever, in the general system of things, is connected 
with that concerning which he inquires; — to the con- 
stitution and properties of the atmosphere ; — the effects 
of changes of temperature on aeriform fluids ; — the mo- 
tions induced by these, by the rotatory movement of 
the globe, and by other circumstances. From them 


INTRODUCTION. 


3 

he deduces the true theory of wind, and shows that it 
is in accordance with the observations and rules of him, 
who has been accustomed to view the subject in its 
practical bearings alone, and tends to elucidate and 
simplify them. 

In a somewhat similar manner wealth was felt and 
noted in its effects long before, as a circumstance 
largely affecting societies, it was proposed philosophi- 
cally to investigate its nature and causes. To mark 
those effects, riches and a series of other terms of the 
sort, were invented. Like all every-day words and 
phrases they apply to particular facts and occurrences, 
and have no necessary reference to the causes of those 
facts and occurrences. All such speculations are foreign 
to mere practice, and never enter even into the explana- 
tions and reasonings of the merely practical man. How- 
ever complicated the social system of which any person 
engaged in the acquisition of wealth makes a part, he 
has no difficulty in tracing the manner in which that 
portion of it which he possesses has been acquired, nor 
in explaining how it forms to him a certain amount of 
what he calls capital. But in giving this explanation, 
it will be observed that for the elements of his state- 
ments, he has always recourse to the existence and 
continuance of certain circumstances and regular trains 
of events in the general system of human society. What 
the things may be which give origin and regular suc- 
cession to these events is a speculation lying out of his 
road, and on which he probably never enters. Though, 
therefore, he can easily tell how he got that which 
constitutes his wealth, and how to him it comes to be 
wealth, he will yet probably confess that he is unable 
to say what constitutes wealth in general, from whence 
it is derived, or what are the exact laws regulating its 
increase or diminution. These are questions of which 


4 


INTRODUCTION. 


the solution is very clearly shown to be of great diffi- 
culty from the mass of discordant opinions concerning 
them.* 

Adam Smith, in this and in other instances, by trans- 
ferring, without hesitation, terms made use of to mark 
and explain the affairs of common life to denote the 
great phenomena which the affairs of societies present, 
falls, as it seems to me, into two errors. In the first 
place, he in a great measure misses that which is the 
real object at which his inquiry aims, the investigation 
of the true nature and causes of national wealth, and 
shows, by holding out sometimes one notion of it and 
sometimes another, according to the different lights in 
which at different times the subject presents itself to 
him, that he has no very definite ideas concerning it. 
In the second place, he naturally, and in very many 
instances, falls into the error of taking, what in truth 
are the results of general laws governing the course of 
this class of events for the laws themselves, and so 
of elevating effects into causes. His procedure is 
not very dissimilar to what that of a philosopher 
would have been, who, desiring to investigate the 
nature of wind, should have assumed it as already 
known, not as an event, but as a thing, and should 
have conceived it his business merely to connect and 
arrange the various phenomena in relation to it, with 
which practice had previously made mankind familiar. 
Such a system could not have failed to have embodied 
great radical defects, for it would have been built on 
principles fundamentally erroneous. 

His followers, by the use they make of definitions, 
appear to me rather to have introduced new evils, than 
to have applied a remedy to those already existing. 


Note B. 


INTRODUCTION. 


5 


Definitions give us the mastery of words, not of things,* 
and therefore by taking them as they have done, for 
principles of investigation, not auxiliaries to it, their 
labors have generally issued in adducing arguments 
instead of collecting and arranging facts, the former 
being the proper fruit of an attention to words, the 
latter of an inquiry into the nature of things. 

I conceive that the fallacies of the particular doc- 
trines I oppose may be most effectually exposed, by 
tracing out the true nature of that wealth, the manner 
of the augmentation and diminution of which, forms the 
subject of controversy. That we can neither assume 
this as a thing already known, nor hope, by any mere 
intellectual effort, to comprehend it in an ingenious 
definition. That when it is really discovered, it must 
be, as has happened in other things, that disputes con- 
cerning its manner of existence, its increase and de- 
crease will terminate, or instead of hinging on plausi- 
ble arguments, may be settled by a reference to ascer- 
tainable facts. It is, therefore, such an investigation, 
that I propose partially to attempt ; and it is chiefly 
on the results of it, that I mean to rest my demonstra- 
tion of the reality of those errors, my conviction of 
the existence of which, has been my motive for engag- 
ing in the present undertaking. 

By entering on such an investigation immediately, 
however, the subject would be brought before the 
reader under an aspect so different from that in which 
it is viewed in the Wealth of Nations, and subsequent 

* A sailor would never think it necessary to explain what wind is. Were 
he asked to do so, it is very probable he would answer “ that which blows,” 
and this would be a correct enough marking out of the meaning attached to 
the word. Mr. Say, in like manner, defines value 'what a thing is worth. 
“ Valeur des choses. C’est ce qu’une chose vaut.*’ Riches, again, he defines 
an amount of values. “ Richesse, c’est la somme des valeurs.” Capital, an 
accumulation of values. Vide Epitome des principes fondamentaux de 
V economic politique. 


6 


INTRODUCTION. 


works following in the same train of thought, that I 
should not have an opportunity of directly meeting 
some of the arguments there advanced. For this 
reason I shall first endeavor to show, that even pro- 
ceeding on similar principles to those adopted in the 
Wealth of Nations itself, there exist great and insup- 
erable objections to the doctrines in question. This 
forms the subject of the First Book. In the Second, I 
enter on the analysis of the nature of wealth and the 
laws governing its increase and diminution. The Third 
is devoted to a practical application to the doctrines 
in question, of the principles established. 


BOOK I. 


INTRODUCTION. 


When wealth, considered in the general, is conceived to be a 
thing either so clear as to require no definition, or so simple as 
to be fully grasped by any definition, two different and opposing 
systems naturally seem to arise concerning it. 

The wealth of all the individuals in a state being, it may be 
said, of necessity measured by the amount of the national wealth, 
whatever adds to the wealth of the nation must increase the 
stocks of individuals. But it has always been found that nations 
have become most wealthy when they have engaged most ex- 
tensively in commerce and manufactures. To encourage com- 
merce and manufactures by every possible means, should, there- 
fore, be the great aim of the legislator ; and every enactment and 
regulation of his conducing to this effect, as it cannot but tend 
to the increase of the general funds, must ultimately add to the 
stocks of individuals. This view of the matter leads directly to 
a system of unceasing regulation and restraint. 

Again, on the other hand, it may be said, that, as the wealth 
of the nation is necessarily made up of the riches of the various 
individuals in it, so the national wealth must grow as each indi- 
vidual adds to the portion of it which he possesses. But every 
restraint is a hindrance to a man’s acquiring wealth, and he always 
gains by evading it. As, therefore, all interference on the part of 
the legislator, operates as a restraint, he never in any case ought 
to interfere. 

As the former view of the subject produces a system of gen- 
eral regulation and restraint, this teaches the doctrine of com- 
plete inaction on the part of the legislator, of the removal of all 
restraint, and of perfect freedom of trade. 

Both systems proceed on the assumption of the exact identity ' 
of public and private wealth ; of wealth, as it is the same word, 
being always the same thing, whether applied to individuals or 
communities, and being in its increase and decrease subjected 
in all cases to similar laws ; — an assumption flowing easily from 
the conception that its nature is very simple and may without 
difficulty be apprehended. 

The latter of these systems, that adopted by Adam Smith, we 
might expect would at present, be most popular in Europe. 


8 


INTRODUCTION TO BOOK I. 


Institutions and forms very often endure after the circumstances 
that had originally called them forth have disappeared, and 
when, consequently, their operation injuriously restrains the 
movements of some new order of things. Such seems the con- 
dition of most European kingdoms at present. The frame of 
their existing constitutions and laws was moulded in remote times, 
in ages of comparative barbarism and stern military rule, and is, 
therefore, in many parts, unsuited to the circumstances of the 
present period. It is perceived that a multitude of abuses exist, 
and the efforts of the majority are directed to detect, expose, and 
do away with them. The prejudices of men of liberal minds 
and enlarged views, for even such men have prejudices, run 
consequently, rather towards overthrowing and rooting out, than 
to establishing and maintaining. A system of political economy, 
the fundamental principles of which, inculcated the doctrine that 
every attempt of the ruler to direct the industry of the commu- 
nity was injurious, and that all laws having this tendency, should 
be abrogated, fell in with the current of public opinion and could 
not but draw to itself a large body of zealous and able advocates. 
It is in this temper that Mr. Bentham addresses its author. 
“ On this subject you ride triumphant, and chastise the imper- 
tinence of kings and ministers with a tone of authority, which it 
required a courage like yours to venture upon, and a genius like 
yours to warrant a man to assume.”* 

It maybe remarked, also, that as the circumstances of Europe, 
in remote ages, produced the former system, in the present give 
popularity to the latter ; so in North America, where a new form 
of government suited to the state which society has there assum- 
ed, has been established, we might expect, as is the case, that a 
medium would be taken between the two extremes, j* 

My main object, in this book, is to show that that notion of the 
exact identity of the causes giving rise to individual and national 
wealth, on which the reasonings and arguments of Adam Smith 
all along depend, is erroneous, that consequently the doctrines he 
has engrafted on it, cannot be thus maintained, and are incon- 
sistent with facts admitted by himself. 

* Defence of Usury. 

t Note C. 


CHAPTER I. 


OF THE IDENTITY OF INDIVIDUAL AND NATIONAL INTEREST CONSIDERED 
AS A SIMPLE PRINCIPLE. 

I have already observed that through every part of his work., 
in the conduct of all his reasonings and arguments, Adam Smith 
blends together the consideration of the processes by which the 
capitals of individuals and nations are increased, and always treats 
of them as precisely identical. Sometimes this is assumed as a 
self-evident truth, sometimes it is a deduction from an ingenious 
theory ; but, in one shape or other, it forms the basis on which his 
whole system is built. If this simple view of the subject be 
admitted as correct, it may very easily be made to lead to the 
conclusions at which he is desirous of arriving. 

The axiom which he brings forward, that the capital of a 
society is the same with that of all the individuals who compose 
it, being granted, it follows that to increase the capitals of all the 
individuals in a society is to increase the general capital of the 
society. It seems, therefore, also to follow that as every man is 
best judge of his own business and of the modes in which his own 
capital may be augmented, so to prevent him from adopting these 
modes is to obstruct him in his efforts to increase his own capital, 
and, in so far as his capital is a part of the general capital of the 
society, to check the increase of that general capital ; and hence, 
that, as all laws for the regulation of commere are in fact means 
by which the legislator prevents individuals conducting their 
business as they themselves would deem best, they must operate 
prejudicially on the increase of individual and so of general 
wealth. 

In pursuance of the same idea of the perfect identity of the 
means by which individual and national capitals are increased, the 
argument is thus further enforced. Accumulation is the means 
by which individual capital is augmented. We know very well 
2 


10 


INDIVIDUAL AND NATIONAL INTERESTS 


that if any person spend as fast as he makes, he can never get 
richer. Whatever his gains are he must save some part of them, 
else he can never add to his capital. The amount also of his 
savings for any period of time must measure the addition, which, 
during that time he makes to his wealth. As, therefore, the 
capital of a single individual is increased by his continually 
accumulating and adding to it whatever he saves out of his 
revenue, so the national capital, or the capital of all the individ- 
uals in a nation, is increased by these individuals continually 
accumulating and adding to it what they save out of their respec- 
tive revenues. Hence whatever prevents them from making the 
most of their respective capitals, or drawing from them the largest 
revenue, in so far as it deprives them of the power of laying past 
so large a portion of that revenue as they otherwise would, must 
in a like proportion diminish their individual accumulations, and 
consequently the sum of all their accumulations, or the amount 
added to the national capital. But all laws for the regulation of 
commerce, and all encouragements given to particular branches of 
industry, do in fact prevent individuals from turning their capitals 
into the channels which, but for these regulations, they would 
prefer as offering the largest returns. They must, therefore, it is 
said, to a certain extent, diminish individual accumulation, and con- 
sequently, in an equal proportion, the increase of national capital. 

Viewing, then, the subject in this simple light, and taking as 
undoubted truths the assumptions of our author, that individual 
and national wealth increase in the same manner, and that the 
manner in which individuals increase their riches is by saving 
from their revenues, we would easily arrive at the doctrine he 
inculcates, that as every man is best judge of his own interests, 
so he should be left to pursue them in his own way, without the 
legislator at all interfering with his operations, or pretending to 
aid or direct them. 

This very simple view of the subject would, however, be 
defective in two respects. 

1. Though it is, in the general, true that individuals may find 
some employment, by the prosecution of which they may procure 
a revenue, and so, by saving from this revenue, acquire wealth, 
or add to what they have before acquired, yet it seems not so 
clear that it is by this means alone that nations advance, or can 
advance, in the acquisition of wealth ; because it must occur to 


ARE NOT IDENTICAL. 


11 


us that materials on which the national industry may be employed 
are to be provided, and often are or may be wanting. 

2 . It is not altogether correct to say that the sole means, 
which an individual employs to add to his capital is the process 
of saving from revenue. It is very evident he must first gain 
this revenue, and that the amount he gains, and consequently the 
amount he can save, must in general depend on the talents and 
capacities he possesses for the prosecution of the particular em- 
ployment to which he devotes himself. As an inquiry, there- 
fore, into the manner in which an individual might most rapidly 
accumulate wealth, would in part resolve itself into an exam- 
ination of the modes by which he might acquire the greatest 
perfection of knowledge, skill, dexterity, and other talents and 
capacities, tending to the successful -prosecution of his business ; 
so an inquiry into national wealth, even supposing the process 
by which nations and individuals add to their riches to be the 
same, must partly resolve itself into an examination of the modes 
by which the knowledge, skill, and dexterity of all the individ- 
uals in a nation, in the various businesses and professions that may 
be carried on in it, may be raised to the highest pitch. 

These two circumstances render the subject more intricate, 
than the first simple view we might be inclined to take of it, 
would lead us to suspect. An attention to the operation of either 
of them will be sufficient to show that that identity of the inter- 
ests of individuals and states, which is assumed throughout the 
Wealth of Nations, is not a self-evident principle. In the fol- 
lowing observations, I shall, however, confine myself to the for- 
mer of them. 

Individuals, it is very clear, in general, increase their capitals 
by acquiring a larger portion of the common funds. While one 
man is growing rich, another is becoming poor, and the change 
produced, seems not so much a creation of wealth, as a pas- 
sage of it from one hand to another. These transfers have been 
, going on in all ages of the world and have existed equally, in 
what has been called the advancing, the stationary, and the de- 
clining stages of society. Every where this means of acquiring 
wealth is open to individuals, and they every where avail them- 
selves of it. Let any one in any country, in Great Britain for 
instance, trace backwards for fifteen or twenty years the muta- 
tions that have occurred in the fortunes of the persons with 


12 


INDIVIDUAL AND NATIONAL INTERESTS 


whom he is acquainted, and he will find that there are few, 
whose circumstances are not very much changed from what they 
then were. Good conduct, good fortune, and frugality have made 
many rich who were then poor ; imprudence, misfortune, pro- 
digality have made many poor who were then rich. 

But while that man has thus been adding house to house, and 
farm to farm, and this has been giving up one portion of pro- 
perty after another, till he finds all he once possessed in the 
hands of others, the whole mass of houses, lands and wealth, has 
undergone but little alteration ; the national capital itself, remains, 
comparatively, but little changed. It is not by thus acquiring 
wealth previously in the possession of others, that nations enrich 
themselves. But a very small part of the capital of any com- 
munity, can, I suspect, be accounted for, by tracing its passage 
from any other community. Instead of one nation growing 
rich, and another poor, we rather see many neighbouring nations 
advancing at the same pace towards prosperity and affluence, or 
declining equally, to misery and want. As individuals seem 
generally to grow rich by grasping a larger and larger portion of 
the wealth already in existence, nations do so by the production 
of wealth that did not previously exist. The two processes differ 
in this, that the one is an acquisition , the other a creation . 

Ex nihilo nihil jit. Nothing can spring out of nothing. Every 
thing that exists must have a cause. As we do not see that in- 
dividuals increase their wealth by creating new wealth, we do 
not think of inquiring how the riches of an individual came to 
exist, but how they came into his possession. But as we do not 
see how nations can increase their wealth, but by creating new 
wealth, we naturally inquire, what are the causes of the wealth of 
nations. 

Adam Smith asserts, and as I think truly asserts, that these 
causes are to be found in the improvement of the productive 
powers of human labor. Men, and therefore nations, are said 
to be rich or poor according to the degree in which they can 
afford to enjoy the necessaries, conveniences, and amusements of 
human life. But as it is the annual labor of the nation which 
suppl ies these necessaries, conveniences and amusements ; so as 
this labor is well or ill directed, the supply it affords must be 
great or small. The skill, dexterity, and judgment with which 
labor is applied ; that is, I presume, the facility of the operations 


ARE NOT IDENTICAL. 


13 


which it employs for executing its ends, and the accuracy with 
which it conducts them, must consequently mainly regulate the 
amount which it produces. Thus the increase of the skill, dex- 
terity and judgment with which the national labor is applied, 
furnishes us with a cause for the increased productive powers of 
that labor, and so for the increase of the national wealth. 

This account of matters will be found sufficiently to agree with 
the ideas which the contemplation of their progress forces on 
every one. When we are told that an individual this year em- 
ploys in agriculture double the capital which he employed last 
year, the conception wffiich most readily presents itself to us is, 
that he now farms double the land which he then farmed, owns 
double the number of horses, cattle, farming utensils, &ic. and 
has double the number of barns and other necessary buildings. 
When we are told that a country has double the agricultural 
capital which it had a century ago, we cannot, of course, conceive 
that its farms are double the extent they then were ; neither do 
we conceive that its farmers have simply double the number of 
barns and other buildings, of cattle, ploughs, harrows, and other 
farming utensils, which they then had. We conceive a change 
in the mode in which its fields are laid out and tilled ; in the 
form and qualities of the stock ; in the construction of all the 
implements of husbandry ; in the size and arrangement of the 
barns and other buildings, and that through these changes the 
national agricultural labor produces at least double the products it 
formerly did. It is this change necessarily involved in our con- 
ception of the process by which nations increase their capitals, 
and not necessarily involved in the process by which individuals 
increase their capitals, that constitutes the difference between 
them.* 

Though they are thus essentially different, there are neverthe- 
less two points in which they agree. When estimated in gold, 
silver, or any other instrument of exchange, the sum at which 
the agricultural property presently possessed by the individual 


* As here I merely aim at giving a very general view of the subject, I only 
refer to what generally occurs. In this and some other instances the text 
does not apply to new countries. Communities commonly occupy the same 
territories unchanged. The growth of such communities as increase by occu- 
pying a larger and larger extent of territory must be regulated in part by laws 
which are exceptions to those that apply to the rest of mankind. 


14 INDIVIDUAL AND NATIONAL INTERESTS 

would be rated would be double that at which what was formerly 
in his possession was rated. The sum, also, at which the present 
agricultural property of the nation would be rated would be 
double that at which it was formerly rated. The things, too, 
that so estimated formed the increase in both, would have been 
produced by man : they would be his works. But though two 
things may both be estimated as worth a sum of money, and may 
both be works of man, it follows not that the principles which 
have produced them are perfectly similar. The poem of Childe 
Harold cost the publisher a certain sum ; so did the paper on 
which it was printed. They both, too, were works of man, and 
required mental and corporeal energy to produce them ; but we 
should not, therefore, say the principles that produced them were 
precisely similar. 

Within a few centuries the national capital of Great Britain 
has increased tenfold. Could we imagine that we could tell 
this fact to some one of the men of the olden time, waked from 
the slumber of the tomb and raised up to us, we may suppose he 
would ask how it could be ; how there could have been produced 
so mighty a change ; or from whence so full a tide of wealth 
could have flowed in upon us. But were we then to take him 
abroad and show him the wonders and achievements of art with 
which the land is overspread ; the various processes carried on in 
our manufactories and workshops ; the scientific labors of the 
agriculturist ; the curious mechanism with which the vast bulk of 
our ships is put together and guided ; fire and water transformed 
into our obedient .drudges, excavating harbors and draining 
mines for us, carrying us over the land with the speed of the 
wind, bearing us through the ocean against tide and storm ; 
he would no longer wonder whence the wealth was that he saw 
around, or that the land yielded tenfold what it had done of old, 
though he might well demand how the power had been acquired 
that had wrought so great a change. 

Were such a thing possible as we are thus imagining we can % 
scarce suppose that any one would be found to reply, the whole 
process is nothing extraordinary ; it is just the same as you must 
have seen in your own days, when, by continual parsimonious 
saving, an individual accumulated ten times the capital he once 
had ; he began, perhaps, with one house and died owing ten. 
Such an assertion would evidently be absurd. 


ARE NOT IDENTICAL. 


15 


Invention is the only power on earth, that can be said to cre- 
ate.* It enters as an essential element into the process of the 
increase of national wealth, because that process is a creation, not 
an acquisition. It does not necessarily enter into the process of 
the increase of individual wealth, because that may be simply 
an acquisition, not a creation. The assumption, therefore, that 
the two processes are perfectly similar is incorrect, and the doc- 
Irine which I have designated as that of the identity of the in- 
terests of individuals and communities cannot be thus established. 

The ends which individuals and nations pursue, are different. 
The object of the one is to acquire, of the other to create. The 
means which they employ, are also different ; industry and par- 
simony increase the capitals of individuals ; national wealth, 
understood in its largest and truest sense, as the wealth of all 
nations cannot be increased, but through the aid also of the in- 
ventive faculty. Though each member of a community may be 
desirous of the good of all, yet in gaining wealth, as he only seeks 
his own good, and as he may gain it by acquiring a portion of the 
wealth already in existence, it follows not that he creates wealth. 
The community adds to its wealth by creating wealth, and if we 
understand by the legislator the power acting for the community, 
it seems not absurd or unreasonable that he should direct part 
of the energies of the community towards the furtherance of this 
power of invention, this necessary element in the production of 
the wealth of nations. 

In the following cases it would at least seem not improbable, 
that the power of the legislator so directed, might be beneficial. 

I. In promoting the progress of science. 

II. In promoting the progress of art. 

1. By encouraging the discovery of new arts. 

2. By encouraging the discovery of improvements in the arts 
already practised in the country. 


* I make use of the term creation, because that of production, which other- 
wise I should have preferred, has been employed in another sense. I trust 
my motives will not be misconceived. “ Etiam inventa quasi novce creationes 
sunt, et divinorum operum imitamenta, ut bene cecinit ille : 

“ Primum frugiferos foetus mortalibus agris 
Dididerant quondam praestanti nomine Athenac : 

Et recreaverunt vitam, legescpie rogarunt.” 

Novum Org. CXXIX. 


16 


INDIVIDUAL AND NATIONAL INTERESTS 


3. By encouraging the discovery of methods of adapting arts, 
already practised in other countries to the particular circumstances 
of the territory and community for which he legislates. 

In the attainment of all these objects, the aid of the inventive 
faculty is required. Our judgment of their propriety or impro- 
priety, as far as this is determined by their direct tendency to 
promote the wealth of the community, would seem to depend 
on two circumstances. 1 . On the probability of their success, 
and of this success enabling the industry of its members to ac- 
quire with increased facility some of the necessaries, conveniences, 
or amusements of life, the capacity for producing which, mea- 
sures the general revenue and riches. 2. On the probability of 
the future wealth to be derived from this new source, being suf- 
ficient to repay the expenditure of present wealth necessary to 
open it up. 

As far as any considerations, which I have as yet presented to 
the reader, warrant us in forming a conclusion, it certainly 
does appear not impossible, or unlikely, that there might be in- 
stances in which the legislator might, with advantage to the pro- 
gress of the wealth of the community, direct the energies of some 
of its members towards discoveries in all these different depart- 
ments of knowledge and action. 

But in doing so, he always acts contrary to this doctrine. It 
teaches that he ought never to disturb the natural course of 
events ; that is, the course which the efforts of individuals, unin- 
terfered with, by him, would give to these events. His agency 
so directed, according to this doctrine, must be injurious ; be- 
cause, in every instance, it in part changes the direction, and 
in part retards the progress of the natural course of events. In 
every such instance, he directs the industry of some of the mem- 
bers of the society from gaining a revenue by the practice of old 
arts and so accumulating capital, to the discovery either of ma- 
terials for new arts, or of means of adapting old ones to new 
countries. By doing so, he takes from the national revenue, and 
retards, consequently, the accumulation of the national capital. 

This doctrine, as given by Adam Smith, is in general, blended 
with theoretical principles afterwards to be considered. The 
following is an abstract of it, in his own words, from different 
parts of his system, separated from these principles. 


ARE NOT IDENTICAL. 


17 


“ The capital of all the individuals in a nation is increased in 
the same manner as that of a single individual, by their contin- 
ually accumulating and adding to it whatever they save out of 
their revenue.* As the national capital is thus increased by 
parsimony, so it is diminished by prodigality and misconduct. 
The conduct of those whose expense just equals their revenue, 
without either accumulating or encroaching, neither increases nor 
diminishes it. It can seldom happen that the circumstances of 
a great nation can be much affected by the prodigality of indi- 
viduals; the profusion of some, being always more than com- 
pensated by the frugality and good conduct of others. Men are 
prompted to expense, by the desire of present enjoyment, a 
passion only momentary and occasional. They are prompted to 
save by the desire of bettering their condition, a passion which 
comes with them from the womb, and never leaves them till they 
go to the grave. In the whole course of life of the greater part 
of men, therefore, though the principle of expense prevails oc- 
casionally, yet the principle of frugality predominates, and pre- 
dominates very greatly.” f 

“ The principle exciting to frugality, the uniform, constant, and 
uninterrupted effort of every man to better his condition, pro- 
duces both public and national, as well as private opulence, and 
is frequently more than sufficiently powerful to counteract the 
extravagance of government, and the greatest errors of adminis- 
tration. Like the unknown principle of animal life, it frequently 
restores health and vigor to the constitution, in spite, not only of 
the disease, but of the absurd prescriptions of the doctor..jl Alone 
and without any assistance, it is capable, not only of carrying on 
the society to wealth and prosperity, but of surmounting a hun- 
dred impertinent obstructions with which the folly of human 
laws too often encumbers its operations.” <§> 

The reader will perceive, that the whole force of these ar- 
guments lies in the assumption, that the process of the increase 
of national capital, is precisely the same as that of the increase of 
individual capital. 

The observation of Bacon is now trite, that men believe that 
the words they employ in the process of reasoning, serve the 
intellect as mere passive instruments, but that, in reality, they 

* Wealth of Nations, B. II. c. IV. t Ibid. B. II. c. III. 

tB. II. c. III. § Ibid. B. IV. c. v. 

3 


18 


INDIVIDUAL AND NATIONAL INTERESTS 


have often an active reflex power, through which, while the 
mincl deems it governs them, they are enabled to usurp the com- 
mand of it, and so misdirect its course. 

Our author notices the errors, which, in this way, have arisen 
from the use of the term money. 

“ Money, in common language, as I have already observed, 
frequently signifies wealth ; and this ambiguity of expression has 
rendered this popular notion so familiar to us, that even they who 
are convinced of its absurdity, are very apt to forget their own 
principles, and, in the course of their reasonings, to take it for 
granted as a certain and undeijiable truth. Some of the best 
English writers upon commerce set out with observing, that the 
wealth of a country consists, not in its gold and silver only, but 
in its lands, houses, and consumable goods of all different kinds. 
In the course of their reasonings, however, the lands, houses, 
and consumable goods, seem to slip out of their memory ; and 
the strain of their argument frequently supposes that all wealth 
consists in gold and silver, and that to multiply those metals, is 
the great object of national industry and commerce.” * 

It is remarkable that, in the use of the term capital, he himself 
leads his readers into a somewhat similar error. Capital means in 
common language a sum of money, or something for which a sum 
of money can be got ; and, as the increase both of national and in- 
dividual capital produces a sum of money, or something for which a 
sum of money can be got, the similar estimation of both by a row 
of figures is the thing that in this way naturally comes uppermost 
to the mind, and hence, the things themselves in both cases forming 
the increase not being immediately present to its thoughts, it heed- 
lessly falls into the conclusion that they also are perfectly similar. 
In comparing indeed the national capital as it has existed at distant 
periods, the small national capital of remote periods with the large 
national capital of the present, we immediately perceive, that not 
only the sum at which the national wealth was formerly rated is 
increased, but that the things which constituted it are changed. 
The wealth of England is certainly ten times now what it was in 
the reign of Henry the VIII ; we do not conceive, however, that 
it is formed by the multiplying tenfold such articles as constituted 
the sole riches of its inhabitants in that somewhat rude and bar- 


B. IV. c. I. Vide note D. 


ARE NOT IDENTICAL. 


19 


barous age. We perceive here, that there is, and must be, not 
only an increase, but a change. When, however, we come to 
consider the smaller parts of which this increase is gradually made 
up, as the change here is not perhaps perceptible, and as all we 
see is the sum produced by it, the fact of the increase being more 
easily ascertained than the manner of it, the similarity of the terms 
naturally inclines us to conceive that it resembles the increase of 
individual capital, and consists of a mere increase of things, not of 
a change also in them. Would we take time to consider of it, 
we must perceive that such an increase of national capital as indi- 
viduals make of individual capita], is, at least, unlikely, seeing 
there is no apparent cause for it. Considering capital in general, 
the only use we can discover for it is its enabling the community 
to draw from the resources the country affords, the necessaries, 
conveniences, and amusements of life, its supply of which, accord- 
ing to our author, constitutes its real wealth. It is only so far as 
it is instrumental to this end that we can see a use, and therefore 
find a reason, for its existence. Now, as one individual is more 
provident and prudent than another, we can easily conceive how 
one may come to procure for himself a greater share than another 
of the national funds, the means, or instruments, serving to unlock 
the stores which the nation possesses ; but it is not so easy to con- 
ceive how, or for what purpose, a general increase of these means 
or instruments should take place without some accompanying dis- 
covery of an improvement in their construction by which they 
may put additional stores within reach of the nation. 

We may easily perceive this, by attending to any of the nu- 
merous small items of which the national capital is composed. 
I shall take an example of a very small one. The only instru- 
ment used for threshing out grain in Great Britain, until of recent 
years, was the flail. Hence one or more flails formed a part, 
though a small part, of every farmer’s capital, and therefore all 
the flails that all the farmers had, a part, though an exceedingly 
inconsiderable part, of the national capital. So simple an instru- 
ment and one so easily formed, was made, I believe, generally, 
by the farmer or his servants, though sometimes, by professed 
mechanics. In whatever way fabricated, it is evident, however, 
that the number of flails made, though from the convenience of 
having a supply provided before hanc) they would exceed, 
could never much exceed, the number of persons employed in 


20 


INDIVIDUAL AND NATIONAL INTERESTS 


the operation of threshing. A professed flail-maker indeed, if 
diligent and intelligent, might, by the aid of these qualities, have 
been able to make them cheaper than his neighbors, and, if 
economical, to extend his business and come to have some amount 
of capital in this shape. But, though thus, by his industry and 
frugality, an individual might have accumulated capital under 
this form to an extent to which we can set no precise limits, the 
national capital never could have been so increased, because, if 
one person by greater diligence and activity, made more flails, 
another, from a deficiency of these qualities, would make fewer ; 
or, if we suppose all the makers of the instrument to be alike in- 
dustrious, and thus the stock of it to accumulate, so as to do more 
than supply the wants of the threshers, the article would remain 
on their hands, and they would naturally cease to produce the 
superabundant supply. While, therefore, the instrument retain- 
ed this less perfect form, it is, I think, pretty evident, that, 
though individuals might accumulate capital by making flails, 
neither the national capital, nor the national revenue, would be 
much increased by their efforts so directed. 

About forty years ago, the easier and more perfect method of 
executing this process, by what is called the threshing machine, 
was invented. These new instruments, though far more expen- 
sive than the former, yet, performing the operation more effectu- 
ally, and with much less labor, became naturally things which 
farmers were desirous of having. A farmer could have had no 
motive to accumulate but a very trifling capital in the shape of 
flails, because half a dozen were as useful to him as half a thou- 
sand ; but he had a great motive to accumulate a considerable 
capital in the shape of a threshing machine, because it would save 
him much annual expenditure of labor, and the operation so per- 
formed, separating the grain more effectually, would give him a 
small addition to the corn yielded by his subsequent crops. Ac- 
cordingly its invention was followed by the accumulation in this 
form, of a large amount of capital, and so by an increase of the 
whole agricultural capital of the nation. But, besides this direct 
effect, the saving it produced in one of the main processes of agri- 
culture augmented the profits of the farmers, and tended, therefore, 
to make all farmers cultivate their farms more perfectly, and some 
to engage in improving land not before cultivated. Both the 
direct and the indirect effects of this invention, therefore, must 


ARE NOT IDENTICAL. 


21 


have helped, in no inconsiderable degree, to augment the agri- 
cultural capital, and so the whole capital of the nation. 

“ It readily occurs to every individual that the quantity of 
hardware, the number of pots and pans, is in every country 
limited by the use which there is for them; that it would be 
absurd to have mdre of such utensils than are necessary for 
cooking the victuals usually consumed there ; and that, if the 
quantity of victuals were to increase, the number of pots and 
pans would readily increase along with it ; a part of the in- 
creased quantity of victuals being employed in purchasing them, 
or in maintaining an additional number of workmen whose busi- 
ness it was to make them.”* But, though the national capital 
cannot thus be supposed to accumulate in the shape of an ad- 
ditional number of pots and pans, individuals who deal in hard- 
ware frequently accumulate capitals in this shape, to a large 
amount. We can easily conceive, that the national capital also, 
might accumulate in this shape, were some discovery, producing 
an improvement in the manufacture, to occur. Were a method 
discovered of procuring and manufacturing platina, or some 
metal similar to it, at only four or five times the cost of brass, 
it would, without doubt, be employed in the fabrication of 
kitchen utensils of all sorts. Not being acted on by fire, and 
other destroying agents, it would save a great deal of the drudg- 
ery of the kitchen, and, though more costly at first, would pro- 
bably, on the whole, be preferred by good economists. Thus, 
pots and pans becoming more expensive articles, the amount of 
national capital, or stock, accumulated in them, would be much 
greater, and, through this improvement, the whole national cap- 
ital would, with advantage to the society, be somewhat aug- 
mented. 

If any one will, in a similar manner, consider any of the other 
articles which help to make up the national capital, I think he 
will have difficulty in assigning a sufficient reason, from any of 
the views presented in the Wealth of Nations, for its increase, 
unless he connect this increase, somehow or another, with some 
improvement in the particular department of industry of which 
its production makes a part, or in some other department de- 
pendent on it. He will perceive, that, though there is no dif- 


* Wealth of Nations, B. IV. c. I. 


22 


INDIVIDUAL AND NATIONAL INTERESTS 


ficulty in conceiving that an individual may accumulate a very 
large capital in the form of any of those articles or commodities, 
the total of which make up the national capital ; with the excep- 
tion, perhaps, of money itself, there is difficulty in discovering a 
reason for the accumulation of any of them, throughout the 
whole community, so as to form any sensible addition to the 
national capital. 

It may perhaps appear, that, in whatever shape the individual 
members of the community may accumulate capital, yet, that 
the efforts of the greater number being thus directed, they might 
accumulate it under some shape or another. We are not, how- 
ever, it will be recollected, here discussing a possibility, but a 
self-evident principle ; not what might be, but what must be. 
Now, there is no necessity for imagining that this must be the 
case, for, without entering at all into the minutiae of the subject, 
it is not difficult to perceive that the action of the principle 
which prompts to save, itself brings about a state of things, 
which diminishes the desire to save. A person must be most 
desirous of getting money when he perceives, that by the ac- 
quisition of it, he could make a great deal out of it ; when it is 
manifest to him, that, if he had a sufficient capital, he could enter 
on some branch of business that would be very profitable. When 
an opening of this sort presents itself to a prudent and enterpris- 
ing, though poor man, the exertions he makes to gather together 
a small sum are sometimes almost incredible. But, if the prin- 
ciple were to prevail so generally as to fill up every branch of 
business within the society, the desire to acquire capital so as to 
enter on some of the particular businesses carried on in the society 
would naturally be diminished throughout the whole country ; 
and this general diminution of the motives to accumulate, might 
be sufficient to preserve the national capital within the bounds 
it had acquired, and prevent it, for a time, from gaining farther 
increase. 

Nor is there any thing in the appearance of human affairs, 
which should induce us to conclude, that the increase of national 
capital ever does, in fact, proceed, unless in conjunction with 
some successful effort of the inventive faculty, some improve- 
ment of some of the employments formerly practised in the 
community, or some discovery of new arts. If we cast our eyes 
over the results, which either reading or observation presents to 


ARE NOT IDENTICAL. 


23 


us, concerning the condition of different nations, we gather from 
our review, that many of them, in regard to the acquisition of 
wealth, have apparently remained stationary for ages, although 
undisturbed by external violence, and unmolested by internal 
tumults. During all the time, however, the process of individual 
accumulation was going on ; men were continually rising from 
poverty to affluence, founding families, and leaving wealth to 
their descendants ; but this wealth passed away from them ; 
what the father gathered was not able to maintain his race, and 
they gradually sank to the rank from which he had emerged. 
The proportion, meantime, between rich and poor, and the total 
wealth of the community, remained but little changed. 

At length, in some quarter or another, an improvement began 
to be perceived. What do we find to have been the most 
prominent accompaniment of this change ? Is it a diminished 
expenditure — an increased parsimony — a frugality before un- 
known ? I believe not. Any great diminution of the expen- 
diture of a whole community, it will be found difficult to trace, 
but we shall always discover that invention has somehow or 
another been busy, either in improving agriculture and the other 
old arts, or in discovering new ones. 

It is only when some great and striking improvement issues 
from the exertions of the inventive power, that we in general, 
attend to its effects. Every one readily grants, that, but for the 
invention of the steam engine, the capital of Great Britain would 
want much of its present vast amount. We perceive not so 
readily the numerous small improvements, which have been 
gradually, from year to year, spreading themselves through every 
department of the national industry. But, though not so pal- 
pably forced on our observation, we pass them by, they never- 
theless exist, and sufficiently account for the manner in which 
the national capital has been augmenting, by being gradually 
accumulating in them, without the necessity of supposing that it 
ever has augmented precisely as that of individuals generally 
does, by a simple multiplication, under the same form, of any 
or all the items, of which its amount was before made up. 

Adam Smith himself admits, that a country may come to be 
fully stocked in proportion to all the business it has to transact, 
and have as great a quantity of stock employed, in every 
particular branch, as the nature and extent of the territory will 


INDIVIDUAL AND NATIONAL INTERESTS 


24 

admit. He speaks of Holland also, as a country which had 
then nearly acquired its full compliment of riches ; where, in 
every particular branch of business, there was the greatest 
quantity of stock that could be employed in it.* It would 
then appear that, even according to him, the principle of indi- 
vidual accumulation, as a means of advancing the national cap- 
ital, has limits beyond which it cannot pass. The same 
cannot be said of that increase which is derived from the at- 
tainment of those objects at which the inventive faculty aims. 
Had Holland, sixty years ago, been put in possession of the as- 
tonishing improvements in mechanical and manufacturing indus- 
try, which, since that period, have sprung up in Great Britain, 
who can suppose that she would have wanted ability to continue 
in the successful pursuit of wealth ; or, that she would not have 
started forward with fresh vigor in the career, and advanced in 
it with greater rapidity than in any former period of her history? 

There is no avoiding the admission, that, to every great ad- 
vance which nations make in the acquisition of wealth, it is ne- 
cessary that invention leading to improvement should lend its 
aid ; and, granting this, it necessarily follows, as when one cause 
is discovered sufficient to account for the phenomena, we should 
confine ourselves to it, that we are not warranted to assume 
that they make even the smallest sensible progress without the 
aid of the same faculty. 

To this general observation there are only two apparent ex- 
ceptions. The progress of commerce by the increase of some 
particular branch of it, or by the opening of fresh branches ; and 
the settlement of new countries. 

If these, however, should be esteemed exceptions to the 
observation with regard to any particular nation or nations, they 
are extensions of it with regard to all the nations of the earth ; 
implying that the increase of general wealth is connected with 
the general spread of invention, or inventions, over the world. 

The principle, therefore, of the identity of the interests of 
nations and individuals is by no means a self-evident principle. 
The identity of their interests can only follow from the identity 
of the ends which they pursue ; but these ends being, as far as 
we can see, identical only in name, and in reality not identical, 


Wealth of Nations, B. I. c. IX. 


ARE NOT IDENTICAL. 


25 


the presumption rather is, that the means also by which they are 
arrived at are not identical. 

It seems to me, that it requires very little pausing upon the 
examination of this principle to perceive its inconclusiveness as 
an argument. It is a principle, nevertheless, which, like other 
popular doctrines founded merely on the ambiguity of a word, 
has been very much insisted on, and meets one in all variety of 
shapes. On this account, the reader may perhaps excuse me, for 
detaining him a little longer on the consideration of it, by bring- 
ing before him a passage from our author, which may serve to 
expose its unsoundness, by showing how easily it may be made 
to lead to the most obvious fallacies. “ The annual produce of 
the land and labor of England is certainly much greater than it 
was more than a century ago at the restoration of Charles II. 
It was certainly much greater at the restoration than we can 
suppose it to have been about a hundred years before, at the 
accession of Elizabeth. At this period, too, we have reason to 
believe, the country was much more advanced in improvement 
than it had been about a century before, towards the close of the 
dissensions between the houses of York and Lancaster. Even 
then it was probably in a better condition than it had been at the 
Norman Conquest ; and at the Norman Conquest., than during 
the confusion of the Saxon Heptarchy. Even at this early 
period it was certainly a more improved country than at the 
invasion of Julius Caesar, when its inhabitants were nearly in the 
same state with the savages in North America. 

“ In each of these periods, however, there was not only much 
private and public profusion, many expensive and unnecessary 
wars, great perversion of the annual produce from maintaining 
productive to maintain unproductive hands; but sometimes, in 
the confusion of civil discord, such absolute waste and destruc- 
tion of stock as might be supposed not only to retard, as it cer- 
tainly did, the natural accumulation of riches, but to have left the 
country, at the end of the period, poorer than at the beginning. 
Thus, in the happiest and most fortunate period of them all, that 
which has passed since the restoration, how many disorders and 
misfortunes have occurred, which, could they have been foreseen, 
not only the impoverishment, but the total ruin, of the country 
would have been expected from them. The fire and the plague 
of London, the two Dutch wars, the disorders of the Revolution, 
4 


26 


INDIVIDUAL AND NATIONAL INTERESTS 


the war in Ireland, the four expensive French wars of 1688, 
1702, 1742, 1750, together with the two rebellions of 1715 and 
1745. In the course of the four French wars the nation has 
contracted more than £145,000,000 of debt, over and above all 
the other extraordinary annual expense which they occasioned ; 
so that the whole cannot be computed at less than £200,000.000 ; 
so great a share of the annual produce of the land and labor of 
the country has, since the Revolution, been employed upon dif- 
ferent occasions in maintaining an extraordinary number of un- 
productive hands. But had not those wars given this particular 
direction to so large a capital, the greater part of it would natur- 
ally have been employed in maintaining productive hands, whose 
labor would have replaced with a profit the whole value of their 
consumption. The value of the annual produce of the land and 
labor of the country would have been considerably increased by 
it every year, and every year’s increase would have augmented 
still more that of the following year. More houses would have 
been built, more lands would have been improved, and those 
which had been improved before would have been better culti- 
vated; more manufactures would have been established, and 
those which had been established before would have been more 
extended ; and to what height the real wealth and revenue of 
the country might by this time have been raised it is not per- 
haps very easy even to imagine.” # 

These conclusions would indeed all follow did individual and 
national capital augment on precisely the same principles ; but 
as the progress of the inventive faculty, an essential element in 
the increase of national wealth, is here left out of the calculation, 
we have good reason to doubt its accuracy. 

Before the time of the Essay on Population, arguments and 
conclusions very similar to these were brought forward concerning 
the waste of human life in wars, and the consequent amazing 
diminution of the greatness and prosperity of nations. Perhaps 
the fallacy of the one doctrine may be best exposed by stating 
the other. 

“ Nations, it was said, can only advance in greatness and pros- 
perity as the numbers of their inhabitants increase. Whatever 
the natural fertility of the soil, however genial the climate, and 


Wealth of Nations, B. II. c. III. 


ARE NOT IDENTICAL. 


27 


however well fitted the whole country may be for the practice of 
every species of industry, yet, if it be deficient in population, 
these natural riches can never be elaborated, and it must hold a 
poor and inconsiderable rank in th'e scale of nations. A confined 
and comparatively barren territory, filled with a numerous, indus- 
trious population, exceeds the most fertile and extensive country 
scantily peopled. It is the people that make the state, its real 
riches lie in its inhabitants. 

“ But as population increases, and can only increase, by more 
coming into the world than go out of it, every man who marries 
and raises a family is a public benefactor, and the practice of 
celibacy, so far from being a virtue, is, in reality, a great public 
crime. The number, however, of those who marry, and have 
children, in all tolerably quiet and peaceable times, much ex- 
ceeds that of those who remain single ; and, consequently, the 
number of all the inhabitants of the earth has continually aug- 
mented, and, had it not been for the wars which the ambition of 
princes has stirred up, would have been still much farther aug- 
mented. 

“ The population of England is now much greater than at the 
Restoration. It was greater at the Restoration than at the 
accession of Elizabeth, and then than during the great civil wars. 
Even then it was greater than at the Conquest, and at that time, 
than at the invasion of Julius Caesar. 

“ In each of these periods, however, there were not only many 
private feuds and public dissensions ; many bloody and harassing 
wars ; great perversion of the powers of the inhabitants from the 
production to the destruction of life ; but sometimes such dread- 
ful massacres and bloodshed, so great multitudes perishing by the 
sword, and by famine following up its ravages, as might be sup- 
posed not only to have retarded the increase of the numbers of 
the inhabitants, but to have left them fewer at the end than at 
the beginning. Had it not been for these events, the greater 
part of those whom they carried off would have married and had 
children, whose whole numbers would naturally have been greater 
than that of the parents who procreated them. In this manner 
every generation would have exceeded proportionably the one 
preceding it. The number of industrious hands thus produced 
would have built more houses, would have improved more lands, 
and would have cultivated better those which had been improv- 


28 


INDIVIDUAL AND NATIONAL INTERESTS 


ed before ; more manufactures would have been established, and 
those which had been established before would have been more 
extended, and how far the population of the country, and its real 
wealth and strength, might have been carried by this time, it is 
not perhaps very easy to imagine.” 

The error, of both reasonings arises, in the same manner, from 
taking what is merely a necessary concomitant, for a cause. It 
is perfectly true, that the real wealth, strength, and prosperity of 
a country, cannot advance, but as its population advances, and 
that population can only advance by more being brought into the 
world than go out of it. It is also true that they cannot advance 
but as its capital advances, and that its capital can only advance 
by more being saved than is spent. But when it is said in either 
case, that as they can only advance as population advances, or 
as accumulation advances, we have only to allow population to 
go on unrestrained, or only to allow accumulation to go on un- 
checked, we are deceived, and led to unwarrantable conclusions, 
by a sort of sleight in the use of words. 

The contemplation of a couple contending with unremitting 
labor against the evils of poverty and want, and, however occa- 
sionally pinched by them themselves, warding them off with care 
and success from their offspring, and rearing up a numerous and 
industrious family, is a very pleasing sight. It is pleasing as an ev- 
idence of the existence of some of the best and purest affections 
of our nature ; it is pleasing, also, from the mere view of the 
healthy addition thus made to that surest stay of a state, an in- 
dustrious and frugal population. But when it is hence assumed, 
that nothing is wanting to augment the numbers of the commu- 
nity, and carry it forward to greatness, than that similar principles 
and conduct should be allowed to go on in all its members with- 
out restraint, a hasty and inaccurate conclusion is drawn from a 
partial view of a complicated subject. The numbers of a state 
can never exceed, what its resources can support. When these 
resources are augmented, the principles which tend to the pre- 
servation and multiplication of the species are, in all well regu- 
lated communities, sufficiently active speedily to fill up their 
numbers to the amount of the increased supply. 

In like manner, the contemplation of honest industry, and pa- 
tient frugality, not only manfully bearing up against present ne- 
cessity and want, but repelling them, and accumulating a plentiful 


ARE NOT IDENTICAL. 


29 

store to answer the demands of futurity, is also no unpleasing 
spectacle. But for such principles neither public nor private 
comfort or affluence could exist, or be preserved. But, when it 
is hence also assumed, that nothing else is wanting to carry the 
community forward to the highest degree of affluence and power, 
than that similar principles and conduct, through all its members, 
should be encouraged, and allowed to go on without check, a 
conclusion equally unwarranted and equally inaccurate, is drawn 
from a like hasty and imperfect view of a great subject. The 
capital of a state is a mere instrument in the hands of its indus- 
try, to enable it to draw forth the riches, with which the conjoin- 
ed powers of nature and art have endowed it. A multiplication 
of instruments is of no avail, unless something additional be given 
on which they may operate. When invention succeeds in dis- 
covering these additional riches, the mere view is sufficient, in 
every well regulated community, to induce its members to form 
the new instruments, necessary to draw these riches forth. 

There must be some strong inherent vice in any community, 
where the certain prospect of plentiful subsistence does not pro- 
duce an abundant population. It can only be, also, from the 
effects of some great inherent vice, that, in any community, a 
very profitable investment for capital can be held out, and yet cap- 
ital not accumulate with rapidity. Where there is no sufficient 
prospect of subsistence, people may be restrained from marriage 
by the dread of their families suffering want. Where there is no 
sufficient prospect of profit, people may be withheld from accu- 
mulating capital, because they may see no sufficiently profitable 
adventure open to them that they would not fear to embark in. 
But the fact is, that people, rather than live single, are inclined 
to marry at all risks, and hence population is kept down by mis- 
ery, and premature death ; and they are also, rather than do no- 
thing, enclined to embark in adventures where the chances are 
against their success ; hence the vast numbers of unsuccessful 
projects that in most communities are continually dissipating pre- 
vious accumulations of capital. To form aright judgment of the 
power of any community, under the most favorable circumstances, 
of increasing its population, we must consider the additional mar- 
riages which would take place, and the greater numbers that 
would be reared to maturity from such as do take place, if plen ■ 
tiful subsistence were provided. In like manner, to form a right 


30 


INDIVIDUAL AND NATIONAL INTERESTS 


judgment of the powers of any community, under the most fa- 
vorable circumstances, to increase its capital, we must consider, 
that, if abundance of secure and profitable investments for capital 
were presented, its members would be more eager to possess ad- 
ditional capital, and, therefore, would be more prompted to accu- 
mulate it ; and the capital they possessed would be more produc- 
tive, and would not be subject to be risked and lost in imprudent 
speculations. 

From the inconsiderable rudiments of population and capital, 
which Great Britain furnished to North America, is to be traced 
the great amount of both, of which that flourishing division of the 
globe at present boasts. The former has increased so greatly, 
because plentiful subsistence has been afforded it : the latter, be- 
cause profitable and secure investments have been presented to 
it. Had it been possible to have afforded, and had the same 
abundant subsistence been afforded, to the population, and the 
same profitable and secure investments to the capital remaining 
within the kingdom, they would have both augmented, we have 
every reason to believe, in a ratio equal to that at which the frag- 
ments of both that went to North America have augmented. It 
certainly was not the voyage across the Atlantic, but the rich 
soil on which they fell on the other side of it, that excited them 
to so luxuriant a growth. 

This great productive power of both the population and capi- 
tal of a country, when room is afforded them to shoot, seems so 
easily to fill up any gap which is made in the national members 
or stock, that a calculation founded on the assumption, that any 
loss in either which a nation may sustain, necessarily occasions a 
proportionably permanent diminution of its funds must evidently 
be inconclusive. It is very doubtful if the population of London 
or England would have been greater than it is at present, had 
there been no plague. It is very doubtful also if the capital of 
London or of England would have been greater than it is at pres- 
ent, had there been no great fire. The additional demand for 
labor and capital, which these disasters created, may very well 
be supposed soon to have brought both up to the amount they 
had previously attained. 

In all instances of such, or even far greater calamities, deslroy- 
ing a part of the population or capital of a country, while the 
principles and elements, through and from which they sprang, are 


ARE NOT IDENTICAL. 


31 


not consumed along with them, we see them quickly reproduced. 
When, for example, the great destroyer War holds his course 
through a country, and clearing wide his path with fire and sword, 
leaves property and life a wreck behind him, we see not that the 
traces of his, wrath are long perpetuated; in the midst of the 
ruins of what were, lie the germs of what are to be, and seizing 
on the elements of existence that lie waste around, they expand 
with a vigor proportioned to the magnitude of the void that has 
been made for them, and speedily replenish it. Like the track 
of the whirlwind through the forest, the present desolation is 
quickly covered up and obliterated by the freshness of the new 
growth, to which that very desolation gives light, and air, and the 
means of existence. We should think the calculation rather 
fanciful, which, estimating the trees overborne by the blast for cen- 
turies, and reckoning the increase that might have possibly come 
from each of them, should bring out as a correct result, that all 
this would have been a clear addition to the vegetable life of the 
forest ; and that so much greater it must have been to-day, had 
not these disasters had place. Calculations proceeding on the 
assumption of the indefinite increase of population or capital, 
without showing also that there will be room for them, are but 
little more logical. 

Before population can advance, there must be something on 
which it can subsist ; before capital can increase, there must be 
something in which it may be embodied. Produce subsistence, 
and, if vice prevent it not, population will follow ; show that if 
capital did exist, it would produce great profits, and, if vice pre- 
vent it not, capital will be accumulated. But, until there be 
some means of subsisting the population, and employing the 
capital, they can never, by simply urging on their production, be 
rationally expected to be much augmented. 

It is invention, which showing how profitable returns may be 
got from the one, and how subsistence procured from the other, 
that may most fitly be esteemed the cause of the existence of 
both ; and hence this power has most title to be ranked as the 
true generator of states and people. It is certainly, therefore, 
very far from being a self-evident truth, that the legislator, by em- 
ploying the resources of the country in rousing this principle to 
activity, necessarily retards, instead of advancing, the increase of 
wealth and the prosperity of the state. 


CHAPTER II. 


OF THE IDENTITY OF NATIONAL AND INDIVIDUAL INTERESTS CONSIDERED 
AS A THEORETICAL PRINCIPLE. 

Though the doctrine of the identity of the interests of indi- 
viduals and communities cannot be established as a simple and 
self-evident .principle, from the assumption that the objects which 
individuals designedly pursue, for their private emolument, are 
precisely those which most promote the progress of the general 
opulence ; and though in this sense, as we have seen, the identity 
of the ends which they pursue is nominal, not real, yet it follows 
not from this that the doctrine is necessarily erroneous. Many 
doctrines which are far more simple or self-evident are neverthe- 
less true. Many, which at first sight seem even contradictory to 
experience, are found, by closer examination, to be legitimately 
deducible from it. It is manifest that the general opulence, how- 
ever brought about, results, in some way or another, from the 
action and reaction on each other of the whole system of persons 
and things, which constitute communities, or belong to them. 
It is then at least possible to conceive that it is entirely produced 
by the efforts of individuals to advance their private fortunes. 
That, though it is the object of individuals to acquire wealth, and 
of nations to create it, yet that the series of actions which the 
former generate, in endeavoring to make the acquisition, are 
precisely those which are best calculated to forward the creation ; 
and that thus, unconsciously to himself, each member of the 
community, while seeking merely his own benefit, necessarily 
adopts the very course which is most for the advantage of the 
society, and, to use our author’s words, “ is led in this, as in many 
other instances, by an invisible hand, to promote an end that was 
no part of his intention.” 

In this view of the subject the doctrine would put off the shape 
of a simple principle, and assume that of a theory deduced from 


INDIVIDUAL AND NATIONAL INTERESTS, &c. 33 

an examination of the whole series of actions that are concerned 
in the production of the wealth of communities ; and in this way 
we may conceive that it might be satisfactorily proved by an 
extended inquiry into the Nature of the Wealth of Nations. 

Such is the theory of this department of human action, which 
the author gives. If it be found not to be inconsistent with the 
phenomena, but fairly deduced from them, the truth of the peculiar 
doctrine, which it is the aim of his wofk to maintain, would be 
established by it. 

Before endeavoring to explain it, or attempting to show wherein 
it fails, it is proper to remark that it is blended, throughout the 
whole work, with that notion of the exact identity of the ends 
which nations and individuals pursue, the fallacy of which I trust 
I have, in some measure, exposed in the preceding chapter. I 
shall afterwards have occasion to show that this arrangement of 
his materials sometimes renders his arguments illogical. I am 
led to notice it at present, because I wish to account for the 
appearance of this assumption, unremarked by me, in the analysis 
of the theory I am about to give. 

It must be apparent to every one acquainted with the system, 
that its parts would not in any way hang together, if deprived of 
the support which this popular notion gives to them. Indeed, I 
conceive that the truest account that could be given of it, would 
be to say, that it is altogether founded on the assumption that 
national and individual wealth and prosperity increase, and must 
increase, in precisely the same manner ; and that the theoretical 
part of it merely serves to show how the increase of individual 
wealth does, in reality, produce the events which we see accom- 
panying national wealth ; that the former is the cause, and the 
sole cause, of the latter, and must therefore produce all the phe- 
nomena attendant on it, being taken for an undeniable fact, and 
the author seeming merely to have proposed to show how it may 
be supposed to produce those phenomena. Thus, were what was 
once the popular doctrine concerning population still held to be 
the correct one, and -were we to take it for granted as an unde- 
niable truth, that, as the national strength, and revenue, and w T ealth 
can only advance as the number of industrious hands that form 
them is increased, so every augmentation of the population of a 
nation is an addition to the national funds, and that, therefore, 
things ought to be allowed to take their natural course, and all 
5 


34 


INDIVIDUAL AND NATIONAL INTERESTS 


restraints on marriage be done away with, the assumption and 
doctrine might be supported by a theory, showing, or endeavor* 
ing to show, how all the phenomena attending the advance of 
mankind towards prosperity and affluence do, in fact, result from 
their increasing numbers. 

It might, perhaps, in support of such a view of the subject, be 
said, “ that, as necessity is the mother of invention, so, unless 
pressed by want, or the dread of it, mankind might never have 
exercised their ingenuity in discovering even the rudiments of 
the arts ; and certainly would not have advanced them beyond 
the most unformed and imperfect elements. That, while in 
genial climates the spontaneous fruits of the earth afforded them 
abundant nourishment, they could have had no motive to tax the 
labor of either their minds or bodies to produce that for which 
they had no need. That it was the increase of their numbers, 
which, rendering the supplies that nature had dealt out to them 
insufficient, imposed the task on them of searching out the means 
of procuring additions to them : and that thus necessity, 

“ Curis acuens mortalia corda 
***** 

Ut varias usus meditando extunderet artes 
Paulatim, &c. — ” 

u Whetting human industry by care 
That studious need might useful arts explore,” 

is in truth the divinity that taught mankind the most essential arts. 

“ Primo Ceres ferro mortales vertere terram 
Instituit ; cum jam glandes atque arbuta sacrae 
Defecerunt sylvae et victum Didona negavit.” 

u First Ceres taught the ground with grain to sow, 

And armed with iron shares the crooked plough ; 

When new Dodonian oaks no more supplied 
Their mast, and trees their forest fruit denied.” 

“ That this urgent necessity, this imperious mistress, which 
nature caused to spring from their increasing numbers, made them 
spread themselves over the earth, and people even the most 
rigorous climates. That the “ rigid lore ” of the “ stern rugged 
nurse ” thus imposed on them, though harsh, was healthful ; as a 
proof of which we may observe, that men in general subsist in 
greatest comfort and abundance, where the climate is most for- 
bidding, and the soil most stubborn, because there, that they 


ARE NOT IDENTICAL. 


35 

may subsist at all, they have been obliged to call to their succour 
the most ingenious arts, and the most indefatigable industry, 

“ Labor omnia vincit 

Improbus et duris urgens in rebus egestas.” 

“ What cannot endless labor urged by need ? ” 

That, as it is the action of this principle which has given rise to 
all the arts, so it is it which has brought them to perfection. 
That, while a territory is scantily peopled, and its inhabitants 
spread over it at a great distance from each other, they can never 
subdivide themselves into different trades and employments, and 
each devoting himself to a particular business and art, exercise 
his whole ingenuity' to bring that particular occupation to perfec- 
tion ; and that hence arts are in general in the most flourishing 
condition, where the population is the most dense. 

“ That to these causes, thus necessarily proceeding from this 
great principle, we are to ascribe in particular both the opulence 
and prosperity of our own nation, and the necessary diflusion of 
the arts, manners, language, and race, with which they are con- 
nected, and in which they are embodied, over the remotest 
regions of the globe. That thus, although men in marrying seek 
only their own good, they nevertheless adopt that course which 
is most to the advantage of society ; and here too, as in many 
other instances, are led by an invisible hand to promote an end 
which was no part of their intention. That, therefore, as the 
revenue and power of a nation can only increase as its population 
increases, and as the increase of population tends to give a begin- 
ning to every useful art, and to carry it to the highest perfection, 
legislators act a very absurd and culpable part in attempting, in 
any instance to restrain it, or to check what is undoubtedly the 
natural, and apparently the most beneficial course of events.” 

Such a theory, like almost every other view of only one side 
of a complicated subject, would probably be partly correct, and 
partly erroneous ; but it might be possible to embrace in it a great 
mass of facts, and perhaps to give it considerable plausibility. 

In examining the soundness of the doctrine founded on it, it 
might first be expedient to allow the assumptions necessarily 
involved in it to pass unnoticed, and to test its accuracy by an 
application to facts. Such is the course which I mean to follow 
in this introductory examination of the somewhat similar theory, 
as it seems to me, which is the groundwork for the vast and varied 


36 


INDIVIDUAL AND NATIONAL INTERESTS 


accumulation of facts and opinions embodied in the Wealth of 
Nations. I shall allow the author’s assumptions to pass unques- 
tioned in all cases where they are mixed with the explanation of 
real events, though I may esteem that explanation erroneous ; 
and it is only where, alone and unconnected with facts, they are 
brought forward for the purpose of arguments as incontrovertible 
truths in order to establish the particular doctrine which I com- 
bat, that I will feel myself called on to expose the fallacies into 
which they lead. 

The celebrated author remarks, “ that it is from his labor alone 
that man can draw the necessaries, the conveniences, the amuse- 
ments of human life, from the materials which nature has placed 
around him. As the amount of these necessaries, conveniences, 
and amusements, which any man can afford to enjoy, constitutes 
his riches ; so the amount of them which all the men in the nation 
can enjoy constitutes the national riches. Labor, then, being the 
first price, the original purchase money, that is paid for all things, 
an inquiry into national wealth is, in fact, an inquiry into the 
means by which the labor of the individuals composing a nation 
may produce, from the materials they possess, the greatest amount 
of necessaries, conveniences, and amusements. 

“ These may either be the immediate produce of that labor, 
or what is purchased with that produce from other nations. 
Hence such an inquiry may be divided into two parts ; the first 
treating of the means by which the produce of the national labor 
becomes greatest ; the second, of the manner in which the part 
transferred to other nations procures from them, in return, the 
greatest amount of necessaries, conveniences, and amusements. 

“ First, then, may be considered the . sources of wealth that lie 
altogether within the society, the means of bringing, by the labor 
of its members, out of the materials which it possesses, the 
greatest amount of products ; that is, of articles affording neces- 
saries, conveniences, or amusements. 

“ This, in any particular nation, must be regulated by two 
circumstances. First, by the skill, dexterity, and judgment with 
which its labor is generally applied ; secondly, by the proportion 
between the number of those who are employed in useful labor, 
and that of those who are not so employed.” It is to the first of 
these circumstances, which he observes is of much the greater 
influence, that our author’s reasonings chiefly refer, and to the 
consideration of it, therefore, we may altogether confine ourselves. 


ARE NOT IDENTICAL. 


37 


“ The chief cause operating on this, the main source of the 
productiveness of labor, is capital. Without capital, industry 
could scarce at all exist. While a man is executing a piece of 
labor, he must have, to maintain him, a stock of goods, and he 
must have ready provided for him the tools and materials neces- 
sary for performing the work. These are all procured by capital. 
A weaver, for instance, could not apply himself to manufacture 
a web of cloth, unless there were somewhere stored up for him 
a supply of food, and other necessaries, sufficient to maintain him 
till he complete and sell it, and were he not provided beforehand 
with a loom and other requisite tools and materials. It is capital 
which provides all these, either his own or that of some other 
person. 

“ As capital is thus the most essential element in setting in- 
dustry in motion, so it is by the amount of it, that the produc- 
tiveness of that industry is chiefly determined. 

“ Every man having capital naturally endeavors to make the 
most of it ; that is, to cause the labor which it puts in motion to 
yield the greatest amount of productions. This he effects by the 
division of that labor ; that is, by separating the operations it has 
to perform into as many distinct parts as possible, and allotting 
each of them to one man, or one set of men, as a peculiar em- 
ployment. 

“ The increase arising to the productive powers of labor, from 
this division of it, is owing to three different circumstances. 
First, to the increase of dexterity in every particular workman ; 
secondly, to the saving of the time which is commonly lost in 
passing from one species of work to another ; lastly, to the inven- 
tion of a great number of machines which facilitate and abridge 
labor. 

“ First, the improvement of the dexterity of the workman 
necessarily increases the quantity of the work he can perform ; 
and the division of labor, by reducing every man’s business to 
some one simple operation, and by making this operation the 
sole employment of his life, necessarily increases by much the 
dexterity of the workman. A common smith, for instance, will 
scarce make more than three hundred nails a day, and those very 
bad ones. A boy who has devoted himself entirely to the business 
of making nails, can make upwards of two thousand. 

“ Secondly, time is not wasted in passing from one work to 


38 


INDIVIDUAL AND NATIONAL INTERESTS 


another, and the indolent sauntering habits induced by the frequent 
change of employment are avoided. 

“ Thirdly, the invention of all those machines by which labor 
is so much facilitated and abridged seems to have been originally 
owing to the division of labor. In consequence of it, the whole 
of every man’s attention comes naturally to be directed to some 
one very simple object. It is naturally to be expected, there- 
fore, that some one or other of those who are employed in each 
particular branch of labor should find out easier and readier 
methods of performing their own particular work, wherever the 
nature of it admits of improvement. In this mode a great num- 
ber of such improvements on the productive power of labor have 
been made. 

“ The other improvements in machinery and manufactures # 
have been also owing to the division of labor. Many of them 
have been made by the ingenuity of those, who, from this 
separation of employments, have taken up the trade of making 
such machines ; others, by that class of citizens of whom also 
philosophy or speculation becomes the sole trade and occupation. 

“ The perfection to which this division of labor may be carried 
depends on the amount of capital that sets it in motion ; because 
the same number of workmen, executing a greater quantity of 
work in proportion as they are better classified and divided, require 
consequently, when so classified, a larger stock of materials, and 
the extent of the stock of materials provided must be regulated 
by the amount of capital accumulated. Again, when so divided, 
they both require and cause to be invented many new machines. 
These machines, also, can only be procured by a capital pre- 
viously stored up. Not only, however, does the accumulation of 
capital, by providing more abundant materials and better machines, 
enable the same number of workmen to be better divided, and to 
produce more work, but it also may be observed that the number 
of workmen in any branch of business increases with the division 
of labor in that branch. Thus the increased accumulation of 
capital, by effecting a more and more extended division of labor, 
not only increases the productiveness of the labor of the same 
number of workmen, but adds to that number. By both means, 
therefore, it greatly augments the total riches of the society, 


I add this word because the chain of reasoning seems to require it. 


ARE NOT IDENTICAL. 


39 


the amount of necessaries, conveniences, and amusements pro- 
duced by its members, and consequently enjoyed by them. 

“ These productions which labor, by the aid of capital, effects 
have to be transported to the places where they are to be con- 
sumed, have there to be stored up till they may be wanted, when 
they have to be divided into small portions, suited to the con- 
venience of the persons who are to use them. The dealers in 
wholesale and retail are enabled to perform these useful offices 
by the instrumentality of capital, and the greater the amount of 
that capital the more easily and effectually they can perform 
them. Hence, every addition their economy makes to that 
amount, tends also to the increase of the general prosperity. 

“ The division of labor is limited by the extent of the market. 
Before any man, or any set of men, can in common prudence 
devote themselves to any particular employment, they must be 
assured that they can dispose of the commodity which their 
exertions in the prosecution of that employment will produce. 
In situations where there is not a sufficient number of customers 
near at hand to consume the manufactured article, or where it 
cannot with advantage be transported to those at a distance, the 
making of that article can never become the exclusive employ- 
ment of any man, or set of men. When, therefore, there is not 
a sufficiently extensive market, labor cannot be so much subdi- 
vided as it otherwise would, and its productive powers are cramped 
for want of room in which to exert themselves. The increase of 
capital extends the market by, adding to the numbers and general 
opulence of the community, and by facilitating the modes of 
communication between all parts of the territories which it pos- 
sesses, and this extending market gives, in turn, additional celerity 
to the increase of capital.” 

To this accumulation of capital, this continual parsimonious 
saving out of revenue, the principle that, according to our author, 
animates the whole progressive movement of the society, he 
assigns the following limit. 

“ When the stocks of many rich merchants are turned into the 
same trade, their mutual competition naturally tends to lower its 
profit ; and, when there is a like increase of stock in all the dif- 
ferent trades carried on in the same society, the same competition 
must produce the same effect on them all. As, then, the profits 
of capital continually lower with its augmentation, there must 


40 


INDIVIDUAL AND NATIONAL INTERESTS 


arrive a period when they will be so diminished as to render it 
no longer possible to save any part of them.” When this period 
arrives, the country would then, I think, according to our author, 
have acquired its full complement of riches ; every branch of 
business therein having the greatest quantity of capital that could 
be employed in it. 

“ But besides the immediate produce of its own industry, a 
country that has made any progress in the accumulation of capital, 
and consequent division of labor, and facility of production, comes 
to furnish other countries with many articles, and, in exchange, 
to receive from them many other articles. This forms another 
source from whence the necessaries, conveniences, and amuse- 
ments of nations may be supplied. A country is enabled to do 
this from two causes. The soil, climate, and natural productions 
of countries -are various. Hence one country has generally 
peculiar advantages over others in manufacturing certain articles. 
Again, one country exceeds another in the amount of capital it 
possesses, and consequently in the skill with which its industry 
is applied ; hence, also, there are articles which it can produce 
in greater perfection than other countries, with greater facility, or 
both. 

“ This is the origin, and these are the advantages, of foreign 
trade. By means of it two or more nations are enabled to ex- 
change with one another what would otherwise have been to 
each superfluous for what, through these exchanges, procures to 
each an additional amount of the necessaries, conveniences, and 
amusements of life. 

“ It is capital which enables them to effect these beneficial 
exchanges, and the amount of them must be limited. by the 
amount of capital that can be embarked in the employment.” 
What quantity of capital this employment may absorb, what 
quantity of productions may thus be exchanged between different 
countries, is a problem which our author has not, as far as I per- 
ceive, given us certain data for solving. Some of his followers 
think it illimitable, but it is clear that this was not his opinion, 4 
and that, though he did not assign the limits, he nevertheless 
believed there were limits to it. Accordingly he makes another 
channel, through which, when these are filled, it may flow, 
gathering still volume to itself, and adding to the national pros- 
perity as it proceeds. 


ARE NOT IDENTICAL. 


41 


u This is what is called the carrying trade, the carrying the 
surplus produce of one nation to another. Two countries may 
have products which it would be advantageous for them to ex- 
change, but they may not have capital sufficient to provide the 
means necessary for effecting this exchange. In such case, an- 
other nation having a superabundant capital may embark part of 
it in performing this office for them, and into this employment a 
country so circumstanced naturally directs such a capital. When 
the capital stock of any country is increased in such a degree, 
that it cannot be all employed in supplying the consumption, and 
supporting the productive labor of that particular country, the 
surplus part of it naturally disgorges itself into the carrying 
trade, and is employed in performing the same offices to other 
countries.”* 

It may be observed, however, with regard to this last em- 
ployment, which our author assigns to capital, that it implies a 
superiority in the progress of the productive industry of the 
country enjoying the trade, which cannot be calculated on be- 
forehand. A nation can only possess a carrying trade, from other 
nations wanting foreign trade. Though it may, therefore, form 
a source of gain to a particular nation, it seems not so properly 
to be reckoned among the causes of the wealth of nations ; for, 
with the general progress of that wealth, according to the theory 
of our author, it would decay. 

The ingenious theory, of the main elements of which, I have 
thus attempted to delineate the outlines, its eminent author has 
illustrated with a felicity of observation, and laboriousness of re- 
search, which it were as vain to attempt to depreciate, as super- 
fluous to praise. He conceives that it establishes the following 
conclusions. 

“ The natural effort of every individual to better his own con- 
dition, when* suffered to exert itself with freedom and security, is 
so powerful a principle, that it is alone, and without any assist- 
ance, not only capable of carrying on the society to wealth and 
prosperity, but of surmounting a hundred impertinent obstruc- 
tions with which the folly of human laws too often encumbers its 
operations ; though the effect of these obstructions is always, 
more or less, either to encroach upon its freedom or to diminish 
its security.”! That “ every system which endeavors, either, 
* Wealth of Nations, B. II. c. V. t B. IV. c. V. 

6 


42 


INDIVIDUAL AND NATIONAL INTERESTS 


by extraordinary encouragements to draw towards a particular 
species of industry a greater share of the capital of the society, 
than what would naturally go to it, or, by extraordinary restraints, 
to force from a particular species of industry some share of the 
capital which would otherwise be employed in it, is, in reality, 
subversive of the great purpose which it means to promote. It 
retards instead of accelerating, the progress of the society towards 
wealth and greatness ; and diminishes, instead of increasing, the 
real value of the annual produce of its land and labor.” And 
therefore, that “ all systems, either of preference or restraint, 
being completely taken away, the obvious and simple system of 
natural liberty establishes itself of its own accord. Every man, 
as long as he does not violate the laws of justice, is left perfectly 
free to pursue his own interest his own way, and to bring both 
his industry and capital into competition with those of any other 
man, or order of men. The sovereign is completely discharged 
from a duty, in attempting to perform which he must always be 
exposed to innumerable delusions, and for the proper performance 
of which no human wisdom or knowledge could ever be suffi- 
cient ; the duty of superintending the industry of private people, 
and of directing it towards the employments most suitable to the 
interest of the society.” # 

I expect in the sequel to show that the system contains certain 
fundamental errors invalidating very many of the conclusions, 
which the author desires to establish. In the mean time, 
passing all such discussions, and viewing the subject in some- 
thing of the light in which it seems to have been contempla- 
ted by Adam Smith himself, I would observe, that his system, 
if correct, must be consistent with itself, and with admitted 
facts. His theory pretends to show, that the source of the 
wealth of nations, the abundance, that is, of all the materials 
of comfort and enjoyment, the necessaries, the conveniences, 
the amusements of life which men possess, is to be found in 
the gradual accumulation of capital by the undisturbed industry 
and economy of individuals, continually, through the division of 
labor, introducing improvements in the modes in which this labor 
operates with that capital, and, consequently, increasing with the 
greatest possible rapidity the returns from them. His doctrine is, 


Wealth of Nations, B. IV. c. IN. 


ARE NOT IDENTICAL. 


43 


that the accumulation of capital by individuals, being thus the 
only thing required to produce that abundance with the greatest 
possible rapidity, ought never to be interfered with by the 
legislature ; and that, if he does so, it must necessarily be to the 
detriment of the society for which he legislates. If, therefore, 
even according to him, there are other sources, than the mere 
accumulation of capital, and consequent division of labor, on 
which nations are dependent for turning their labor and capital 
to the best account, and thus drawing from their resources the 
most abundant returns of necessaries, conveniences, and amuse- 
ments, that is of wealth ; in so far, his theory would seem im- 
perfect, and his doctrine inapplicable. If we then in particular 
turn to the part of the system with which we are specially 
interested, we find, in reality, that as far as it is concerned, the 
theory is thus inconsistent with events admitted by its author, 
that hence this portion of it is contradictory to itself, and to 
admitted phenomena, and that consequently the doctrine drawn 
from it cannot here be maintained. 

In the account of the progress of opulence, given in the Wealth 
of Nations, we find assigned, as one of the causes of it, the intro- 
duction into a country of new manufactures. “ According to the 
natural course of things,” we are told, “ the greater part of the 
wealth of any growing society is first directed to agriculture, 
afterwards to manufactures, and last of all to foreign commerce.”* 
“ After agriculture, the capital employed in manufactures puts 
into motion the greatest quantity of productive labor.” f The 
utility of such manufactures is enlarged on in many parts of the 
work. “ They give a new value to the surplus part of the rude 
produce by saving the expense of carrying it to the water side, 
or to some distant market, and they furnish cultivators with 
something in exchange for it, that is either useful or agreeable to 
them, upon easier terms than they could have obtained it before. 
The cultivators get a better price for their surplus produce, and 
can purchase cheaper other conveniences which they have occa- 
sion for. They are thus encouraged and enabled to increase 
this surplus produce by a farther improvement and better cultiva- 
tion of the land ; and as the fertility of the land had given birth 
to the manufacture, so the progress of the manufacture reacts 
upon the land, and increases still farther its fertility. The manu- 

* Wealth of Nations, B. III. c. IX, \ B. II. c. V. 


44 


INDIVIDUAL AND NATIONAL INTERESTS 


facturers first supply the neighborhood, and, as their work im- 
proves and refines, more distant markets. For though neither 
the rude produce nor even the coarse manufacture could, without 
the greatest difficulty, support the expense of a considerable land 
carriage, the refined and improved manufacture easily may. In 
a small bulk it frequently contains the price of a great quantity of 
rude produce.” * “ The revenue of a trading and manufacturing 

country must, other things being equal, always be much greater 
than that of one without trade or manufactures. By means of 
trade and manufactures a greater quantity of subsistence can be 
annually imported into a country than what its own lands, in the 
actual state of their cultivation, could afford. The inhabitants of 
a town, though they frequently possess no lands of their own, 
yet draw to themselves, by their industry, such a quantity of the 
rude produce of the lands of other people as supply them, not 
only with the materials of their work, but with the fund of their 
subsistence. What a town always is in regard to the country in 
its neighborhood, one independent state or country may fre- 
quently be with regard to other independent states or countries .f 
Commerce and manufactures gradually introduced order and 
good government ” (into Europe) “ and with them the liberty 
and security of individuals, among the inhabitants of the country 
who had before lived almost in a continual state of war with their 
neighbors, and of servile dependency upon their superiors.^ 

“No foreign war, of great expense or duration, could con- 
veniently be carried on by the exportation of the rude produce 
of the soil. The expense of sending such a quantity of it to a 
foreign country as might purchase the pay and provisions of an 
army would be too great. Few countries, too, produce much 
more produce than what is sufficient for the subsistence of their 
own inhabitants. To send abroad any great quantity of it, there- 
fore, would be to send abroad a part of the necessary subsistence 
of the people. It is otherwise with the exportation of manufac- 
tures. The maintenance of the people employed in them is kept 
at home, and only the surplus part of their work is exported. 
Among nations to whom commerce and manufactures are little 
known, the sovereign, upon extraordinary occasions, can seldom 
draw any considerable aid from his subjects. $ In modern war 

* Wealth of Nations, B. III. c. III. 
t B. IV. c. IX. 


1 B. III. c. IV. 
§ B. IV. c. I. 


ARE NOT IDENTICAL. 


45 


the great expense of fire arms gives an evident advantage to the 
nation which can best afford that expense ; and, consequently, 
to an opulent and civilized over a poor and barbarous nation.” 

According to our author, some of these manufactures proceed 
from the original rude arts of the country cultivated and refined 
by the gradual progress of capital and of the division of labor ; 
others are introduced from foreign states. This transfer takes 
place in the following manner. Trade first, by degrees, intro- 
duces a taste for the foreign manufacture ; the demand for it 
increases with time and the opulence of the society. But when 
this trade has become so general as to occasion an exiensive 
consumption, the merchants of the country, to save the expense 
attending the transport of the article from a foreign country, 
introduce the manufacture of it at home. 

In some cases, then, the increase of capital, arising from the 
accumulation of individuals, and division of tabor thence arising, 
is not, it would appear, sufficient alone to account for the progress 
of improvement, and consequent production of fresh funds out of 
which wealth may grow. For, in cases where the raw materials 
exist, and capital to divide tabor and put it in motion also exists, 
these are sometimes confessedly dependent on the importation of 
new arts from other countries, for the means of being advantage- 
ously directed. These admitted facts are certainly not in ac- 
cordance with our author’s theory. Passing, however, the con- 
sideration of this at present, I should wish to direct the reader’s 
attention to the application of his peculiar doctrines to events of 
this class ; and, that I may do so, it is necessary to examine them 
with somewhat more attention. 

When goods are transported from a distance, a great part of 
their price is made up of the expense, attending the transport. 
This arises not merely from the simple expense of carriage, but 
from the risk attending it, from the perils of land and water, and 
the carelessness or knavery of those who are entrusted with it ; 
from the profits which the different capitalists, through whom they 
may be transferred, exact, and from the damage to which com- 
modities are subject by being long kept on hand. The price of 
very many commodities transported from one country to another 
is doubled by the influence of these causes ; not a few of them 
derive more than three fourths of their value from them. 

Hence the transfer of the manufacture of such goods to the 


46 


INDIVIDUAL AND NATIONAL INTERESTS 


countries to which, when manufactured, they were before sent, 
is very highly advantageous to those countries. It is advantage- 
ous from the saving to the national income which it effects by 
doing away with the expense of transport ; from furnishing, 
according to our author, a new and more profitable employment 
for capital ; and from the general effects it produces on the 
national prosperity, as exemplified by him in the passages I have 
quoted. It must be allowed, however, that this introduction of 
such manufactures, by the violent operation, as he terms it, of 
the stocks of particular merchants and undertakers, who establish 
them in imitation of some foreign manufactures of the same kind, 
is a matter of great difficulty. 

For, in the first place, the materials which the home supply 
affords will, in all probability, be not altogether similar to those 
that are used for the same purpose in the foreign country. Some 
may be better, some worse adapted to the purpose, but they can 
scarcely be altogether alike. They must vary, too, in their 
price, some being cheaper, some dearer, than in the country from 
whence the manufacture is brought. 

The greater part of manufactures are also influenced by the 
climate. The dryness or moisture of the atmosphere, the de- 
grees of heat and cold, the brightness of the sky and consequent 
intensity of the light, are circumstances which all, more or less, 
affect many manufactures. 

The proportion between the rates of wages and profits of 
stock is also very different in different countries, and it consider- 
ably influences the determination of what may be the most ad- 
vantageous mode of conducting any process in any country. 

When the discovery of that exact mode of procedure, which 
the relations and connexions that these new circumstances have 
to each other renders most expedient, has once been made, it 
may be found that they are on the whole more favorable, and 
such as will produce a better article, at less cost, in the country 
to which the manufacture is transported, than in that in which it 
was originally exercised. To make the discovery, however, of 
this exact procedure is always a matter of difficulty, and implies 
almost necessarily the previous commission of many errors and 
mistakes, and the incurring of much needless expense and loss. 
A single individual, whatever intelligence and application he may 
possess, can scarce hope to arrive at it ; it requires the efforts of 


ARE NOT IDENTICAL. 47 

many individuals, continued through a considerable course of 
time. 

But these modifications, in the process of any manufac- 
ture, which its removal from one country to another demands, 
are far from being the only difficulty attending that removal. 
An accurate knowledge of the principles of the manufacture, and 
of the manner in which every part of it is carried on in the 
foreign country, must be obtained ; the requisite machinery has 
to be provided, and workmen, possessing the skill and dexterity 
which each part of the process requires, must be procured. These 
are generally matters of great, difficulty. 

Very few individuals have a thorough knowledge of every 
different part of any complicated manufacture. In examining 
any large and successful manufacturing establishment, we com- 
monly find that the various parts of it depend, for the perfection 
with which they are conducted, on the efforts of different indi- 
viduals, who devote their whole attention to their own depart- 
ments, and are not at all qualified to change places with each 
other ; while the director of the whole has only such a general 
knowledge of each as enables him to say when it is properly con- 
ducted, not himself to point out the exact mode of best conducting 
it. It is his business to preserve the economy of the whole, and 
to search out the individuals best fitted for carrying on every part. 
Hence the undertaker of any such work, in a country where it 
has not been practised, has not only to engage one, but generally 
many individuals, in order that the different processes of the 
manufacture may be properly conducted. The difficulty of 
finding persons of sufficient intelligence and integrity for the 
purpose, who will remove to a distant country, without an ex- 
travagant reward, is very great, and the risk of being imposed on 
by engaging persons of insufficient skill, and consequently suffer- 
ing considerable loss, is not small. The difficulty of transporting, 
or of constructing there, the necessary machinery, is often still 
greater ; and when these are procured, workmen having the 
requisite skill and dexterity for performing the mere manual part 
are still wanting. These, if brought from a foreign country, as 
is often necessary, can only be induced to expatriate themselves 
by the receipt of exorbitant wages ; and, even if the natives of 
the country where the new manufacture is to be established can 
be trained from the first to execute the necessary manual opera- 


48 


INDIVIDUAL AND NATIONAL INTERESTS 


tions, besides the loss arising from their deficient dexterity, they 
will demand higher w T ages than those engaged in established 
employments. A man . naturally prefers continuing in any sort 
of work which he understands, rather than displaying his awk- 
wardness in attempting to perform an operation that is strange to 
him. Besides, he has, in general, reason to apprehend that, 
should the new manufacture fail, he will have difficulty in again 
finding employment in the trade he had forsaken. On these 
accounts it happens that iu when a projector attempts to establish 
a new manufacture, he must at first entice his workmen from 
other employments by higher wages than they can either earn 
in their own trades, or than the nature of his work would other- 
wise require ; and a considerable time must pass away before he 
can venture to reduce them to the common level.” * 

All these circumstances create so many obstacles to the efforts 
of private individuals, in their endeavors to carry a manufacture 
from a country in which it already prospers, to another in which 
it is unknown, that it is, I believe, very rarely they have suc- 
ceeded in doing so, without the occurrence of some favorable 
conjuncture of events, to aid them in the project. 

In point of fact it will be found, that the transfer of manufac- 
tures from one nation to another, or rather the general propa- 
gation, through all countries, of this most important source of 
the opulence of every one, has been chiefly owing to causes, 
which, at first sight, would seem little calculated to produce so 
beneficial effects. Wars and conquests, — tyranny and persecu- 
tion, — the jealousy and hatred of rival states, have, strange to 
say, been the main agents in disseminating arts and industry over 
the globe, and thus ameliorating the social condition of the whole 
human race. Events, that, to those to whom they happened, 
brought nothing but calamity and suffering, have procured pros- 
perity and opulence to the generations that have succeeded 
them ; convulsions, that disturb and derange the frame of civil 
society, like those which occasionally shake and desolate the globe, 
in the midst of present destruction and devastation, carrying often 
the elements of future fertility and abundance. 

Manufactures have commonly been carried to a distance by 
the men who have exercised those manufactures. But no one 


* Wealth of Nations, B. I. c. X. 


ARE NOT IDENTICAL. 


49 


willingly expatriates himself. They even, who would seem to 
have least to attach them to their native soil, the poor mechanic, 
and drudging laborer, cling to it with the greatest tenacity, and 
generally quit it not, unless forced from it by inevitable necessity 
or by the continued pressure of some heavy evil. In this 
way the ills, that the tyranny of despots, or civil and religious 
factions, or war, or famine, brings upon communities, have often 
compelled great numbers of their most industrious citizens, to 
abandon their homes, and seek refuge in foreign countries. These 
emigrations have been powerfully instrumental in improving the 
arts of civilized life and diffusing a knowledge of them over the 
earth. Perhaps few arts would have much passed the narrow 
limits to which their first discovery confined them, had not com- 
munities been subject to be torn in pieces, and scattered abroad, 
by the violence of the events to which we allude. They have 
been taking place in every age since the world began, and have 
been, every now and then, forcing large bands of men to quit 
their native homes and seek refuge in foreign countries. When- 
ever such emigrations occur, they carry the knowledge and skill 
of the countries they leave, into those in which they settle, and 
diffuse them over them ; by bringing together the different arts of 
different countries, they enable one to borrow from the other, and 
raise all nearer to perfection ; and, by giving opportunity to them 
to unite with one another, from that union, they occasionally 
produce some that did not before exist. In all these modes, 
they have promoted very greatly the progress of human im- 
provement. The influence of these causes, though more powerful 
in remote ages than in the present times, has not yet ceased. It is 
shown in events of very recent date or actual progress. To 
it we chiefly owe the origin of those flourishing states, which 
the European race have raised up in North America ; and the 
rapid progress over the Western Hemisphere, of every improve- 
ment that art or science effects in the Eastern. 

Besides the direct agency which these outbreakings of the 
violent passions of mankind, by disturbing and deranging the 
smooth and uniform course of human existence, have had in 
casting it into new and often improved forms, they have produced 
similar effects in a manner less conspicuous and evident. Com- 
merce introduces a taste for the productions of the arts of one 
country into others, which are remote from it. These productions, 
7 


50 


INDIVIDUAL AND NATIONAL INTERESTS 


at first regarded as mere superfluities or luxuries, pass, in time 
and from habit, into things essential to the comfort, almost to the 
existence, of those who have become accustomed to their use. 
War interrupts this commerce and thus cuts off the supply that 
it afforded of such articles. Excited by the rewards offered by 
the eagerness of a demand that cannot be supplied from abroad, 
the domestic industry of the country then exerts itself, first, to 
produce rude imitations of the foreign commodity, and at length, 
rival manufactures. This is a cause which has extensively op- 
erated in modern times, in spreading manufactures from country 
to country. It is to the wars springing out of the French rev- 
olution, and the interruption to European commerce that they 
occasioned, that the first rise of many manufactures in different 
parts of the old and new world, which are now in a very prosperous 
condition, is to be traced. 

But besides the influence which the violent operation of for- 
eign wars, and intestine commotions, has had in promoting the 
propagation of arts over the world, many of them unquestionably 
have been encouraged and enabled to extend themselves to, and 
take root in, countries remote from the seats where they originally 
flourished, by t^ie direct efforts of the legislators of such coun- 
tries, to draw them there, to cherish their first feeble advances, 
and to promote their subsequent growth and vigor. There are 
very few productions of modern art, that do not stand indebted 
to the legislators of the countries in which they are manufactured, 
for their advancement and perfection. 

These three causes have, generally, more or less cooperated 
with each other in the extension and advancement of every 
branch of art. The cases where the efforts of private individ- 
uals, unaided by one or all of them, have been successful in 
transferring any manufacture to a distant country, are, as I have 
already observed, exceedingly rare. 

In accordance with the doctrine which he supports throughout, 
it is here maintained by our author that the last of these causes 
operating in the production of new arts, or in their introduction 
into a country, the interference, viz. of the legislator, is improper, 
because necessarily injurious ; and that his agency, so directed, 
always, and from its very nature, instead of promoting the ad- 
vancement of the general opulence and prosperity, operates in a 
manner prejudicial to both. Allowing that this introduction of 


ARE NOT IDENTICAL. 


51 


new arts and manufactures from foreign states is, in itself, bene- 
ficial, in so much that he assigns it, as we have seen, as one of 
the causes of countries becoming wealthy and prosperous ; he 
maintains, that this particular mode of introducing them is neces- 
sarily injurious. We have then to inquire, if there are any other 
means by which, according to his principles, this acknowledged 
most beneficial result can be brought about. 

The violent operation of foreign wars or domestic disturbances, 
will scarce, I think, be said to be more advantageous methods of 
effecting this purpose, than the restrictions and bounties of the 
legislator. At all events such causes are continually diminishing 
in their frequency and the vigour of their operations, and be- 
coming more and more beyond the reach of our calculations. 
For spreading the useful arts from people to people, this 
element confessedly of very great importance in the advance of 
the general welfare of mankind, there remains then, according 
to these principles, but the unaided efforts of private individuals 
alone. 

It must be kept in mind, that, by the efforts of individuals, are 
meant, according to our author, their endeavors to better their 
condition ; that is, as he defines it, to increase their fortunes. 
But, in order to add to his fortune, one must get more than he 
gives. No such efforts can ever lead any individual to embark 
in a project that will probably take more from him, than it will 
return to him. Now, to transfer a manufacture from one country 
to another, must always be a very tedious and expensive opera- 
tion, for any individual to perform. The consideration of his 
own profit, the sole motive according to our author, which deter- 
mines the owner of a capital to employ it in any undertaking, 
would never lead one, to engage in the enterprise of establishing 
a new manufacture in any country unless of such commodities as 
were of common consumption in it, and which he could therefore 
be sure to sell. Those commodities being of common consump- 
tion, and not produced within the country, must at the time 
be furnished by some foreign state, and, consequently, to procure 
their sale, he must be able to supply them, at as cheap a rate as 
that state. The effecting this, for reasons I have stated, would 
generally take more time and money, than any private individual 
can afford. But, granting that the funds of some private individ- 
uals could afford this requisite outlay, and that they should sue- 


52 


INDIVIDUAL AND NATIONAL INTERESTS 


ceed in bringing the manufacture to such perfection as to enable 
them to sell the commodity on terms equal to those of the foreign 
merchant, or lower than his, the more difficult question is, how is 
this great outlay to be reimbursed ? A great part of an individ- 
ual’s capital has been expended. This expenditure can, evidently, 
be reimbursed to him only by his drawing proportionally larger 
profits, than he otherwise could, from what remains. To balance 
the extraordinary outlay, he must have extraordinary returns. 

But profits far exceeding the usual rate of profit can scarcely 
ever be drawn, for any time from, any employment. “ If, ift^ 
the same neighborhood, there was any employment evidently 
more advantageous than the rest, so many people would 
crowd into it, that its advantages would soon return into the 
level of other employments.”* It is no doubt true, that the 
proprietor of such new manufacture might, sometimes, not only 
succeed in establishing it, but in keeping secret the great profits 
he made from it, for a considerable period. This is a piece of 
good fortune, however, which, though it might sometimes befall 
an individual, he could never beforehand fairly calculate on. It 
is much more probable that his success would be blazoned abroad 
and exaggerated, that several projectors would establish themselves 
beside him, and, by bribing his workmen with somewhat higher 
wages, with comparative ease, succeed in depriving him of the 
profits he might otherwise have drawn from his extraordinary 
outlay of labor and capital, f It may, therefore, I think, be safely 
laid down as a principle, that, in all ordinary cases, a due regard 
to their own interests cannot be a motive sufficient to prompt 
individuals to such undertakings. It may no doubt happen, as 
capitalists are every now and then engaging in injudicious pro- 
jects, and such as either injure or ruin them, that some one may 
be imprudent enough to enter on such a project as this, and may 
succeed in introducing a particular manufacture, though with the 
loss of part, or of the whole of his capital. But, even granting 
that such an occurrence as this may sometimes take place, it 


* Wealth of Nations, B. I. c. X. 

t This accounts for a remark of our author : “ The undertaker of a great 

manufactory is sometimes alarmed if another work of the same kind is estab- 
lished within twenty miles of him. The Dutch undertaker of the woollen 
manufacture at Abbeville, stipulated, that no work of the same kind should 
be established within thirty leagues of that city.” 


ARE NOT IDENTICAL. 


53 


would be far from serving to help out the theory we are discuss- 
ing. “ Every injudicious and unsuccessful project in agriculture, 
mines, fisheries, trade, or manufactures, tends to diminish the 
funds destined for the maintenance of productive labor. In every 
such project, though the capital is consumed' by productive hands 
only, yet, as by the injudicious manner they are employed, they 
do not produce the full value of their consumption, there must 
always be some diminution in what would otherwise have been 
the productive funds of the society.”* This project then, being 
injudicious and unsuccessful, for it would have occasioned the 
loss of a portion of individual capital; must, by these principles, 
be injurious to the society. 

If it be said by any supporter of these doctrines, that this is 
too strict and constrained an interpretation of them, and that the 
loss which the society sustains, by the destruction of the capital 
of the original introducer of the manufacture, must be allowed to 
be made up by the gain which it receives from the profits made 
by those who afterwards engage in it ;f I reply, that I perfectly 
agree with him in his conclusions. I too think, that the small 
present expenditure of the funds of the society which-the project 
may occasion, may be more than repaid, by the large future rev- 
enue that it will bring in. The only difference between us is, 
that the doctrines he advocates, teach us to wait, till the miscal- 
culations of some unfortunate projector confer on us a public 
benefit, whereas, I hold, that it would be more just and judicious 
that the necessary first cost of the scheme should be borne by the 
whole community ; more just, as thus the burden necessary to 
be borne to procure a common benefit will be divided amongst 
all, instead of being sustained by one; more judicious, as the 
society will not have to wait, for the attainment of a desirable 
object, on so doubtful a chance as the folly of projectors. 

It may also happen, that an individual, by some rare concurrence 
of accidents, may become initiated into all the secrets of some 
foreign manufacture, and, by some equally rare and happy union 
of good fortune and ingenuity, may succeed in introducing it into 

* Wealth of Nations, B. II. c. III. p. 131. 

t " The landlord can afford to try experiments and is generally disposed to 
do so. His unsuccessful experiments occasion only a moderate loss to him- 
self. His successful ones contribute to the improvement and better cultiva- 
tion of the whole country.” B. V. c. II. 


54 


INDIVIDUAL AND NATIONAL INTERESTS 


his own country with profit to himself. To wait, however, for 
this, or any such like lucky chance, or singularly fortunate con- 
currence of circumstances, while better could be done, would be 
like waiting till the natural actions of the winds and tides should, 
by some strangely propitious concurrence of events, cast upon 
our shores a valuable plant or seed, that we might directly pro- 
cure for the mere trouble and expense of sending for it. 

There are, also, another class of motives, capable, no doubt, 
of leading even individuals into such undertakings, and of carry- 
ing them successfully through them. The love of country or 
fame, or the desire to gratify personal vanity, are powerful mo- 
tives of human action, and may sometimes even be directed into 
such channels as this. But, as the tendency of such motives to 
promote the growth of national wealth is opposed to the principles 
^of our author, and is expressly denied by him, we need not here 
enter into any inquiry concerning them. 

There is, however, one case, in which it cannot be denied, 
that the efforts of individuals to promote their own interests may 
be sufficient to introduce a new manufacture. If, in the progress 
of events, the requisites for a foreign manufacture come to be 
produced in so great abundance, and with so much facility, in 
any country, that a projector there finds that he can from the 
first afford to manufacture the commodity, and sell it at as low a 
rate as the foreign merchant, a due regard to self-interest will 
certainly direct a portion of the national capital into that employ- 
ment. But, a case of the circumstances of a country being so 
peculiarly favorable to the practice of a foreign art, that, in the 
very first essays it makes in it, it can successfully compete with 
another, where that art has been long established, is assuredly 
very rare ; and, if any such case occur, we may be satisfied that 
the manufacture might, with much advantage, have been pre- 
viously introduced. 

In a passage already quoted, it is observed, that, “when 
a taste for foreign manufactures becomes general, the mer- 
chants, in order to save the expense of carriage, naturally en- 
deavor to establish some manufacture of the same kind in their 
own country.” These expressions are somewhat too loose 
to coincide with our author’s theory. It cannot be to save 
the expense of carriage, but to add to his own riches, that a 
merchant will endeavor to do any such thing. The consumma- 


ARE NOT IDENTICAL. 


55 


tion of such a measure, by saving a considerable expense to the 
community, might indeed add largely to the means of increasing 
their wealth in possession of all the merchants, or rather of all 
the members of the society ; but “ it is his own advantage, and 
not that of the society, which every member of it has in view 
and, in this system of perfect liberty and freedom from restraint, 
which is asserted to be the true plan of carrying the general 
prosperity of the community to the highest pitch, the difficulty 
is, to discover a method of inducing an individual to incur an 
unavoidable outlay, the returns from which, although very bene- 
ficial to the whole society, are no more so to him who lays out a 
great deal, than to others who lay out nothing. Union is said to 
give strength. But union cannot exist unless there be a bond to 
unite, and this bond must confine and restrain. The rods to 
make a bundle were tied together. Men are tied by law, a 
bond binding all to pursue the course supposed to conduce most 
to the general happiness. This bond, though restraining indi- 
vidual freedom of action, and preventing individuals from pursu- 
ing the course which they might find most conducive to their 
own private happiness, has not, on the whole, been esteemed to 
have slightly promoted the great end for which it exists, the 
general wellbeing of mankind. We seek to rectify its errors, 
not to abolish it. The peculiarity of this system, relating to this 
particular part of the field of human action, is, that it maintains 
that men cannot in it, as elsewhere, unite, so as to attain a com- 
mon good. That, on the contrary, when they so unite, instead 
of attaining a common good, they necessarily burden themselves 
with a common evil. It aims, not to remedy any errors com- 
mitted in adjusting the bond, but, to cut it asunder and cast it 
away. It is called a system of complete freedom from restraint 
and perfect liberty. These terms, when looked at nearly, will 
be found to mean a dissolution of all bonds and total isolation of 
interests. Hence, in this particular case, where an end is to be 
gained, the attainment of which it is admitted would be beneficial 
to all, it is yet maintained that it is impossible for all to bring it 
to pass without hurting instead of benefiting themselves. 

It is impossible to shut the eyes to the fact, that the introduc- 
tion of an art into any country, enabling the labor of its inhabit- 
ants at once to transmute the products, which nature, in conjunc- 
tion with their own industry, procures for them, into the commodi- 


56 


INDIVIDUAL AND NATIONAL INTERESTS 


ties their wants demand, instead of sending them to a distance to 
other people to effect that change, is a great good to all, were it 
only for the mere saving of transport thus effected ; hut it is 
maintained, that it is impossible for all the members of the com- 
munity advantageously ' to unite in bringing about this common 
benefit. It is clearly seen, that a new channel might be opened 
from the exhaustless river of human power, springing from the 
mingled sources of nature and art, and that, if so, a plenteous 
stream would flow in on the community from which individuals 
drawing might largely add to the general opulence. But some 
means must be employed to open it up. There is an obstruction 
in the way that must previously be overcome ; a rock blocking it 
up that must be removed. No individual will open up the 
channel, because, were he so to do, he could derive no more 
benefit from the labor than others who had not labored. The 
whole society, or rather the legislator, the power acting for the 
whole society, might do so, and in similar cases has done so, and, 
to judge of the measure by the events consequent on it, with the 
happiest success. Why, then, should he not ? 

The arguments advanced by the author of the Wealth of Na- 
tions, to prove that the legislator never ought to lend his aid to 
effect such a purpose, are chiefly contained in the second chapter 
of the fourth book. They will be found to rest almost altogether 
on the assumption, that national and individual capital increase 
in precisely the same manner. This notion, I flatter myself I 
have shown, cannot, by any means, be taken as a self-evident 
principle, or one so firmly established as to serve to build an 
important practical doctrine on it. But, even admitting that the 
two processes are similar, the arguments of Adam Smith would 
not altogether bear out his conclusions. 

It is, he says, and the sentiment serves for a motto, and forms, 
indeed, the substance of two volumes that have contributed 
greatly to spread his doctrines over Europe, “It is the maxim of 
every prudent master of a family, never to attempt to make at 
home what it will cost him more to make than to buy. The 
tailor does not attempt to make his own shoes, but buys them of 
the shoemaker. The shoemaker does not attempt to make his 
own clothes, but employs a tailor. The farmer attempts to make 
neither the one nor the other, but employs those different artificers. 
All of them find it for their interest to employ their whole industry 


ARE NOT IDENTICAL. 


57 


in a way in which they have some advantage over their neigh- 
bors, and to purchase with a part of its produce, or, what is the 
same tiling, with the price of a part of it; whatever else they have 
occasion for. What is prudence in the conduct of every private 
family can scarce be folly in that of a great kingdom.” 

To make the fanciful parallel here assumed as complete, in 
any sense just, it would be necessary to place the tailor at a hun- 
dred miles distance from the shoemaker. Were he at this dis- 
tance, and did he find that the expense of getting a pair of shoes 
carried so far was considerable, perhaps exceeding their first cost, 
he might find it good economy even to make them himself. To 
be sure, the procuring the requisite tools and the learning their 
use, would render the making of the first few pairs much more 
expensive than the purchasing of them would have been. But 
this necessary dearness of the first articles produced might be 
compensated by the cheapness of those produced subsequently. 
In the same way, though a farmer, if the tailor and shoemaker 
were near at hand, would do wisely to employ them, yet, if they 
were at a great distance, he might possibly with advantage dis- 
pense with their services, and set some of his family to make 
clothes and shoes for the rest. A farmer, indeed, would have 
peculiar inducements to practise some trades, those, namely, for 
which he supplied the raw materials, as by doing so he would 
be saved the carriage, both of the articles made, and of the stuff 
for making them. It is thus, that, in fact, in most countries where 
the population is scattered and the internal communications are 
bad, many trades are practised in the farmers’ houses and by 
their own families. In this way it is that, in very many of the 
recently settled parts of North America, every operation that the 
wool undergoes, from the taking off the fleece to the cutting and 
making up the cloth, is performed in the farmer’s house and by 
his own family. A similar state of things caused a similar prac- 
tice to prevail in England a century ago, and, at present, keeps 
up many of those manufactures which are properly termed 
domestic, in many other parts of Europe. In Canada it is not 
uncommon for the farmer to have, not only the whole processes 
that wool undergoes till it come to be worn, carried on by the 
members of his own family, but also to get a great variety of 
other things made by them, which he could not procure other- 
wise unless by sending to an inconvenient distance. The mend- 
8 


58 INDIVIDUAL AND NATIONAL INTERESTS 

ing of shoes, very generally, the making of them, not nnfre- 
quently, and sometimes even the manufacturing the leather, are 
in recent and remote settlements thus performed. The latter 
process, I may add, from various circumstances, but chiefly from 
the use of the bark of a sort of pine peculiar to the country, and 
in general very common, and which, unlike that of the oak, 
is very thick and easily collected, is much less expensive in 
Canada than in Britain. 

I knew two brothers whose farms or estates lay in one of the 
interior districts of that country, in the midst of its forests, and 
consequently at a considerable distance, perhaps twenty or thirty 
miles, from artificers of any description. Having each of them 
large families and productive farms, they had occasion for the 
services of various artificers, and had the means of paying them. 
Nevertheless, they very rarely employed them ; almost every 
article they required was made by some one of the two families. 
As they were prudent and sagacious men, of which they produced 
the best evidence in the general success of their undertakings, 
and the prosperity of the settlement of which they were at the 
head, I think it likely, that in this also they had turned their 
means to the best account. In fact, as they who are familiar 
with the details of beginning settlements in North America, will 
admit, by this plan they in a great measure obviated the two 
chief drawbacks on the prosperity of new and remote settlements, 
the excessive dearness of every article not produced there, from 
the great expense attending the transport of the raw produce and 
retransport of the manufactured goods, and the serious incon- 
venience arising from the difficulty, in such situations, of supply- 
ing, when necessary, unforeseen but pressing wants. 

Among other things which they got made on their own farms, 
were boots, shoes, and leather. That they might get this done, 
they were at the pains and expense of sending one of the young 
men to some distance, to make himself sufficiently master of those 
trades for their purpose. They thought, however, that the cost 
they were thus put to was repaid, thrice over, by the saving of 
time and expense which it effected for them, in enabling them to 
make, out of leather which cost them very little, numerous arti- 
cles that they must otherwise have been constantly sending for 
to a great distance by roads that were almost impracticable a great 
part of the season. I do not know whether in this their conduct 


ARE NOT IDENTICAL. 


59 


was judicious or otherwise, but, it is very certain, that however 
apparently prudent the measure may have been, and however 
great the saving effected by it might have been, it was completely 
contrary to our author’s doctrines, and might easily be shown by 
them to have been necessarily and inevitably injurious. 

We may suppose that, just at the time when these two legislators 
of this little community had come to the determination of taking 
means to dispense with the services of the distant tanner and 
shoemaker, they were addressed on this subject by a philosopher 
of this school. His reasonings would doubtless have been in the 
following strain. “ You are assuredly wrong in the plan you are 
going to adopt, for it proceeds upon very erroneous and illiberal 
principles, as I can easily show you. You are in want, you say, of 
some pairs of shoes, surely then it is best for you to purchase them 
where you can get them cheapest. But, by the plan you are 
taking of going to a great expense to have them made at home, 
they will certainly cost you more when made there, than if bought 
at the place where you have hitherto purchased shoes. And, if 
that place can supply you with this commodity cheaper than you 
yourself can make it, better buy it there with some part of the 
produce of your own industry. The general industry of your 
settlement must always be in proportion to the capital which 
employs it, and will not be diminished by being left to be 
employed in a way in which you have some advantage. By 
forcing it to produce an object which it can buy cheaper than it 
can make, it certainly is not employed to the greatest advantage. 
Let things therefore take their natural course, and shoes will be 
made at your doors when it is fit for them to be made there.” 

To these reasonings our legislators might possibly reply, “ We 
confess that the first pairs of shoes that we get, will cost us much 
more, thus made at home, than they would do were we to buy 
them abroad. But then it will only be for the first articles man- 
ufactured that we shall pay so high, in the end they will come 
cheaper to us at home than from abroad ; and it is to effect this 
desirable result, that we are going to undertake the project. We 
don’t understand very well what you mean by the natural course 
of affairs, but we think the sooner we can get them to take a 
course, that will before long make things, cheaper to us, the 
better.” The answer to this in the words of our author would 
be : “ I don’t at all dispute, that, by means of this project, this 


60 


INDIVIDUAL AND NATIONAL INTERESTS 


particular manufacture may be acquired sooner than it could be 
otherwise, and after a certain time, may be made at home as 
cheap, or cheaper, than abroad. But, though the industry of your 
society may be thus carried with advantage into a particular 
channel sooner than it could have been otherwise, it will by no 
means follow that the sum total, either of its industry, or its rev- 
enue, can ever be augmented by any such project. The indus- 
try of your society can augment only in proportion as its capital 
augments, and its capital can augment only in proportion to what 
can be saved out of its revenue. But the immediate effect of 
this project of yours is to diminish its revenue ; and what dimin- 
ishes its revenue is certainly not very likely to augment its cap- 
ital faster than it would augment, were you to leave capital and 
industry to find their natural employments.” 

Our legislators might still possibly answer. “ As far as we 
can comprehend your arguments they reduce themselves to this. 
We have to give out what js a considerable sum to us, before 
we can carry this project into effect, and, for this outlay, you 
think we shall get no adequate return. Now in this our opinion 
differs from yours. We know indeed that we must expend some- 
thing, but we think that in the long run we shall be better repaid 
for this expenditure, by this undertaking, than by any other in 
which we could employ our funds. We never yet got any thing 
without giving something for it, and, although we in this instance 
give money or money’s worth, and get chiefly knowledge and skill 
in return, yet if you will take the trouble of examining the calcu- 
lations we have been making of the saving which we shall in a 
few years effect, chiefly by me^ns of this knowledge and skill, on 
what we annually pay for shoes and boots, we think you will 
agree with us that we shall gather in three times what we gave 
out.” 

“No no,” our philosopher would exclaim, “ this is quite un- 
necessary, I see now how the case stands. I perceive you have 
got a theory as well as I have. But your theory is that of prac- 
tical men who reason upon facts, whereas my theory is built upon 
general axioms. Now there is this great difference between two 
such theories, that when they are opposed to each other the latter, 
such as mine must always be right, the former such as yours 
wrong. My main axiom on which is founded a great system is, 
that capital always augments by accumulation. This you per- 


ARE NOT IDENTICAL. 


61 


ceive is a general axiom, and however it may be that there may 
be apparent exceptions to it, yet as it is a general axiom, it is a 
philosophical consequence that these exceptions can only be appar- 
ent. Your theory is opposed to this axiom of mine, for you 
pretend to say that capital may be augmented by other means 
than simple accumulation, and very strangely assert that, after 
giving it out of your hands, you will get it replaced to you, with 
large profit, out of the skill and knowledge which the outlay has 
procured you. But, as in proof of this you bring me only facts 
and figures, you will see of course that it is quite unnecessary for 
me to notice such arguments ; for, however plainly it might from 
them appear that your scheme is practicable and must ultimately 
liberally repay your advances, yet, this conclusion being proved 
by reasoning, is a theory, and that theory having the disadvantage 
of not being drawn like mine from general axioms, and being 
merely a laborious deduction from particular observations, it must 
of necessity follow from indubitable philosophical principles, that 
it is wrong, and mine right. The case being so, you are, I hope, 
men of too good sense to dispute the matter farther. Should 
you however persevere I must take the liberty of telling you that 
you are too narrow-minded theorists, and that, by interfering, in 
the manner you are about to do, with the natural course of events, 
you will infallibly waste the resources of your infant community, 
and retard its prosperity.” 

I apprehend such philosophic arguments would not have had 
much success with them or other men of practice, and that, even 
should we take the procedure adopted by individuals, as a fit model 
for that of nations, we would not find that it altogether agreed 
with the rules which the doctrines of Adam Smith inculcate. 
The reason is, that individuals, as w^ell as nations, acquire wealth 
from other sources than mere saving from revenue ; that skill is 
as necessary, and consequently as valuable, a cooperator with the 
industry of both, as either capital or parsimony ; and that there- 
fore the expenditure which either may be called on to make to 
attain the requisite skill, is very well bestowed. 

But, though skill is valuable both to nations and to individuals, 
there are many circumstances that render it more so to the former, 
than to the latter. In the first place, it is more durable. What- 
ever may be the perfection to which an individual may have 
brought his skill, dexterity, and judgment, in conducting any par- 


62 


INDIVIDUAL AND NATIONAL INTERESTS 


ticular set of operations, that perfection perishes with him. What- 
ever expense it' may have cost him to acquire this possession, and 
however valuable it may be to himself, he cannot transmit it to 
his heirs. But any addition which a society makes, to the skill, 
dexterity, and judgment, with which its members exercise any 
branch of industry, is not of this fleeting nature. Instead of the 
benefits derived from it, being bounded by the short space of time 
that the active life of an individual embraces, they are continuous 
with the national existence. If it be worth while paying a con- 
siderable apprentice-fee, for the acqusition of an art, which can 
probably only be exercised for twenty or thirty years, it must be 
better worth while to pay for one, the advantages derived from 
the possession of which, may be retained for hundreds or thou- 
sands of years. 

Again, whatever an individual may expend in acquiring any 
degree of skill is, to a certain extent, lost to him ; though he may 
draw a revenue, he cannot draw a capital from it. No portion of 
the future skilled labor of an individual can be sold, because it 
can only be sold with himself, and such bargains, sanctioned in 
ancient, are not so in modem times. No where can one effect- 
ually make over his services for a certain time to any other per- 
son, because, no where can he give that person the power of en- 
forcing their exertion. On the contrary, any portion of the 
future revenue, yielded by the skilled industry of a nation, may 
be sold, and, consequently an addition to the national skill gives a 
proportional addition to the command of national resources, to meet 
any sudden emergency. The produce of the general industry 
of Great Britain, stands mortgaged for a sum, which it would 
have appeared a century ago utterly impossible to conceive that 
industry could sustain, because, a century ago, it was impossible 
to conceive the vast increase which has since been made to the 
skill, dexterity, and judgment, with which it was then directed. 

Besides these and other differences between the effects result- 
ing from the acquisition of skill in the pursuits of industry by 
nations, and by individuals, there is one on which I have already 
enlarged. An increase of skill seems to be always a necessary 
concomitant of the increase of national wealth, whereas it is not 
always a concomitant of the increase of individual wealth. It is 
not therefore true, that nations and individuals increase their 
wealth in the same manner, nor, were it so, do the rules, which 


ARE NOT IDENTICAL. 


63 


modern political economists lay down for the increase of national 
wealth, agree with those which individuals adopt in their en- 
endeavors to augment their private stocks. 

The main arguments, however, which the author brings for- 
ward, are built on what he assumes to be general principles. 
The doctrine he maintains throughout his whole system, and 
more particularly in the chapter to which I have alluded, turns 
on the following passage. 

“ If a foreign country can supply us with a commodity cheaper 
than we ourselves can make it, better buy it of them with some 
part of the produce of our own industry, employed in a way in 
which we have some advantage. The general industry of the 
country being always in proportion to the capital which employs 
it, will not thereby be diminished, no more than the capital of 
an artificer is diminished who purchases an article from another 
practising a different art instead of making it himself. It will 
only be left to find out the way in which it can be employed 
with the greatest advantage. It is certainly not employed to 
the greatest advantage, when it is thus directed towards an object 
which it can buy cheaper than it can make. The value of its 
annual produce is certainly more or less diminished, when it is 
thus turned away from producing commodities evidently of more 
value than the commodity which it is directed to produce. Ac- 
cording to the supposition, that commodity could be purchased 
from foreign countries cheaper than it can be made at home ; it 
could therefore have been purchased with a part only of the 
commodities, or, what is the same thing, with a part only of the 
price of the commodities, which the industry employed by an 
equal capital would have produced at home, had it been left to 
follow its natural course. The industry of the country, there- 
fore, is thus turned away from a more to a less advantageous 
employment ; and the exchangable value of its annual produce, 
instead of being increased, according to the intention of the law- 
giver, must necessarily be diminished by every such regulation. 

“ By means of such regulations, indeed, a particular manufac- 
ture may sometimes be acquired sooner than it could have been 
otherwise, and after a certain time may be made at home as 
cheap, or cheaper, than in the foreign country. But though the 
industry of the society may be thus carried with advantage into 
a particular channel sooner than it could have been otherwise, 


64 


INDIVIDUAL AND NATIONAL INTERESTS 


it will by no means follow that the sum total either of its indus- 
try or of its revenue, can ever be augmented by any such reg- 
ulation. The industry of the society can augment only in pro- 
portion as its capital augments, and its capital can augment only 
in proportion to what can be gradually saved out of its revenue. 
But the immediate effect of every such regulation is to diminish 
its revenue ; and what diminishes its revenue is certainly not 
very likely to augment its capital faster than it would have aug- 
mented of its own accord, had both capital and industry been 
left to find out their natural employments. 

“ Though, for want of such regulations, the society should never 
acquire the proposed manufacture, it would not upon that account 
necessarily be the poorer in any one period of its duration. In 
every period of its duration its whole capital and industry might 
still have been employed, though upon different objects, in the 
manner that was most advantageous at the time. In every period 
its revenue might have been the greatest which its capital could 
afford, and both capital and revenue might have been augmented 
with the greatest possible rapidity. 

“ The natural advantages which one country has over another, 
in producing particular commodities, are sometimes so great, that 
it is acknowledged by all the world to be in vain to struggle with 
them. By means of glasses, hot-beds, and hot-walls, very good 
grapes can be raised in Scotland and very good wine, too, can 
be made of them, at about thirty times the expense for which at 
least equally good can be brought from foreign countries. Would 
it be a reasonable law to prohibit the importation of all foreign 
wines, merely to encourage the making of claret and burgundy 
in Scotland ? But if there would be a manifest absurdity in 
turning towards any employment thirty times more of the capital 
and industry of thp country than would be necessary to purchase 
from foreign countries an equal quantity of the commodities 
wanted, there must be an absurdity, though not altogether so 
glaring, yet exactly of the same kind, in turning towards any 
such employment a thirtieth, or even a three hundredth part of 
either. Whether the advantages which one country has over 
another be natural or acquired, is in this respect of no conse- 
quence. As long as the one country has those advantages and 
the other wants them, ij will always be more advantageous for the 
latter rather to buy of the former than to make. It is an acquired 


ARE NOT IDENTICAL. 


65 


advantage only, which one artificer has over his neighbor who 
exercises another trade ; and yet they both find it more advan- 
tageous to buy of one another, than to make what does not be- 
long to their particular trades.” 

I must be excused for running somewhat into repetition in 
observing, that the strength of this passage evidently lies in the 
axioms, “ The industry of the society can augment only as its 
capital augments, and its capital can augment only in proportion 
to what can be gradually saved out of its revenue and that the 
proper answer to these axioms is, either, that they prove nothing, 
or, that they prove it by a begging of the question, by assuming 
that to be proved which is in process of proof. The expression, 
the industry of the society can augment only as its capital aug- 
ments, may signify, either, that the augmentation of a society’s 
capital, and an increase of its productive industry always accom- 
pany each other ; or, that every augmentation of the productive- 
ness of the general industry, is produced by an augmentation of 
capital, and can be produced by nothing else. In like manner, 
the expression, the capital of the society can augment only in 
proportion to what can be gradually saved out of its revenue, 
may signify, either, merely that the saving from revenue is a 
necessary part of the increase of the general capital, and mea- 
sures its amount, or, that there are no other means of augmenting 
its capital but it. In the former of these two senses the axioms 
prove nothing; in the latter they prove all things desired, be- 
cause they assume them as acknowledged truths. The double 
meaning of the assumptions contained in these axioms, and the 
fallacy into which they may, in consequence, be made to lead, 
may be easily perceived by an application of them to the trans- 
actions of an individual. 

A person residing in England, owns an estate in the West 
Indies, which he . proposes to visit. His motives to do so are, 
that he thinks, that, by his personal superintendence, he can 
give a better direction to the industry employed on it, and ren- 
der the returns greater. In order to do so, it is necessary for 
him to procure and expend a certain sum to pay for the expense 
of the voyage, and the cost of the various articles which his pri- 
vate accommodation will require there, and he therefore takes 
measures to apply to this purpose a considerable part of one 
year’s revenue of the estate. On account of this disbursement, 
9 


66 


INDIVIDUAL AND NATIONAL INTERESTS 


some one objects to the project, and endeavors, in the following 
manner, to prove to him that it must be hurtful to his interests : 

“ The augmented productiveness of your estate, and the in- 
creased amount of capital at which it will be estimated, must go 
on- together. But, to add to capital, it is necessary to save from 
revenue. Now the scheme you are about to embark in requires 
first a large expenditure of revenue. It must therefore tend to 
prevent your augmenting your capital, and consequently the pro- 
ductive industry of your estate, which two things always go on 
together.” The answer to this reasoning would be : “ It is 

chiefly because I am aware that the productiveness of my estate, 
and what it is worth, are inseparably conjoined, that 1 am about 
to be at this expense and trouble, for I believe they will enable 
me to put things in such a train that its productiveness will greatly 
increase, and, as its value I know depends on the revenue it 
yields, my capital will consequently be augmented by much 
more than the sum I am going to expend.” 

“I perceive I have not expressed my meaning properly,” 
replies the adviser, “ I should have said ; an increased produc- 
tiveness of your estate, can be produced by no other means 
than by an augmentation of the capital employed on it, and the 
amount of capital you can possess and can employ on it, can be 
augmented in no other way than by saving from your revenue. 
But this plan of yours causes an expenditure of your revenue, it 
must therefore prevent you from adding to your capital, and, 
consequently, from increasing the productiveness of the industry 
which is set in motion by it on your estate.” 

The W est India proprietor might undoubtedly reply : “ My 

dear Sir you are completely wrong. The productiveness of my 
estate depends, not only on the amount of the capital which sets 
the industry employed on it in motion, but on the sort of motion 
it gives it ; and I hope so to improve this, by a more judicious 
regulation of it, that the same power will produce a far greater 
effect than it does at present, and thus to show you, that there 
are other means of augmenting capital than simple saving. For 
I take it, that if I add to my gains, without increasing my ex- 
penditure, the procedure may be just as effective to this end, as 
if I were to diminish my expenditure, and not add to my gains.” 

If we understand the axioms of our author in the former sense 
of the expressions, it is clear, that when applied to national capital, 


ARE NOT IDENTICAL. 


67 


they prove nothing more than when applied to individual capital. 
For, if it be merely meant that the productiveness of national 
industry, and the augmentation of national capital advance together, 
the propriety of a proposed measure may as well be inferred from 
its tendency to render the industry of the community more pro- 
ductive, as its impropriety may be inferred from its requiring a 
small immediate expenditure of revenue. The question to be 
determined in every such case, would then be similar to that which 
an individual determines when deliberating on any scheme for the 
augmentation of his private capital, and would resolve itself into 
an inquiry, whether or not the probable returns from the proposed 
measure, be likely to be a sufficient remuneration for the expense 
of carrying it into effect. But, it is very clear, that this would 
be a constrained interpretation of the import of the passage ; and 
that the inference the author wished his expressions to convey, 
is, that an increased productiveness of the industry of the society 
can be produced by no other means but by augmenting its capital, 
and that the only means entering into the process of augmenting 
its capital are saving from its revenue. 

The proper answer to these axioms, so understood, is, this is 
your theory no doubt, but it is a theory which is merely in pro- 
cess of proof, and not yet established. Surely, then, it is scarce 
logical to answer a very obvious objection to it, which the obser- 
vation of human affairs presents, by assuming its truth ; or, to 
deduce the impropriety of a practical measure, drawn from the 
phenomena which human affairs present, and apparently very 
beneficial, by showing that such measure is contrary to its 
principles. 

The question hitherto stands thus. You pretend to account 
for the phenomena of the augmentation of national wealth by 
showing, that an increase of national capital tends to facilitate the 
division of labor; that this division of labor in itself greatly im- 
proves the productive powers of labor, and is the cause of all 
other improvements in them. That this increase of the produc- 
tive powers of labor, being equivalent to an increase of the revenue 
of the society, adds to its power of accumulating fresh capital and 
giving farther extent to the division of labor, the great generator, 
according to your system, of all wealth. It is in this way that, 
according to you, the augmentation of the industry of the society 
is produced by an augmentation of its capital, and in no other 


68 


INDIVIDUAL AND NATIONAL INTERESTS 


manner, and its capital augmented by saving from revenue and 
nothing else, and that, from the action and reaction of these 
principles on each other, the whole phenomena of the growth of 
national capital are deducible. 

Now, admitting for the present that no fallacy can be detected 
in the principles themselves, they must still be admitted to be 
only possible or probable theoretical assumptions, to be proved 
by the observation of their coincidence with facts. Admitting 
then also that, as far as the facts which relate to what we may 
call the history of the internal progress of national wealth are 
concerned, they sufficiently accord with them, there is another 
class of facts admitted by you, which these principles do not 
explain, and to which, on the contrary, they seem to be opposed. 

Arts and manufactures, the great sources of increase to the 
productive powers of labor, do, it is granted, pass from country 
to country. It would appear then, that the gradual increase 
which the accumulation of capital produces on the productive 
powers of any society, is not alone sufficient to call forth all the 
resources which that society possesses ; but, that it is often 
necessary to seek in other countries for the means, which give 
these resources full efficiency. In such cases, at least, therefore, 
the augmented wealth of the society cannot be said altogether to 
flow from the gradual increase of its capital by accumulation, the 
consequent division of labor, and the improvements thence 
resulting. Your theory is, therefore, so far most certainly defec- 
tive, as it acknowledges the existence of a class of phenomena, 
the laws regulating which its principles by no means explain. 

Instead, however, of attempting to answer the objections to 
your system, which this class of phenomena present, you pre- 
tend to say, that the practical rules directly, and in the simplest 
manner, deducible from them, are of necessity erroneous, because 
contrary to the principles of your system. It being acknowledged 
by every one, even by yourself, that the improvements of the 
productive powers of labor thus effected by the continued spread 
of the arts of civilized life from country to country, are among 
the chief causes of the progress of national wealth and prosperity, 
they who have had the management of national affairs, have in 
different cases come to the unavoidable conclusion, that they did 
well in even sacrificing a small portion of the national revenue, 
provided this outlay served to introduce acknowledged improve- 


ARE NOT IDENTICAL. 


69 


ment in the national industry, and source of national wealth. 
They have acted in this as an individual would do in the manage^ 
ment of his private affairs, they have endeavored to introduce an 
improvement into the management of the funds with which they 
were intrusted, and have considered the price to be paid for such 
improvement warranted by the increased productive powers it 
would give to the same capital, and consequent increase to the 
national revenue, and national funds, which it would tend to pro- 
duce. Like individual schemes their projects seem sometimes to 
have succeeded, and sometimes to have failed. But though, 
when he acts, it is incident to man’s imperfect nature occasionally 
to err, to sit down therefore in resolute inactivity would be the 
worst error he could commit. 

The celebrated author admits, that a manufacture may be 
introduced by the operations of the legislator, sooner than it could 
otherwise be, and thus come to be made at home as cheap, or 
cheaper, than abroad. But then, he says, in spite of these appa- 
rent advantages of such a proceeding on his part, it must be 
wrong, because it is contrary to my system. And, before you 
can prove that it is justifiable, you must prove that the benefits 
resulting from it could not possibly have happened some other 
way. “ Though, for want of such regulations, the society should 
never acquire the proposed manufacture, it would not upon that 
account necessarily be the poorer in any one period of its dura- 
tion. In every period of its duration, its w T hole capital and 
industry might still have been employed, though upon different 
objects, in the manner that was most advantageous at the time. 
In every period its revenue might have been the greatest which 
its capital could afford, and both capital and revenue might have 
been augmented with the greatest possible rapidity.” 

Now, I conceive, that instead of calling on his opponents to 
prove, that all the advantages arising from any such scheme 
might possibly come to pass without it, he himself has to show, 
that they must come to pass without it. And, that he has to do 
so, not by assuming his theoretical principles as true, — for, if they 
are so, his axioms embrace and decide this and every case at 
once, — but by an examination of the course of human affairs, and 
a regular deduction from them, of the certainty of these apparent 
advantages, or others equivalent to them, flowing in from some 
other channel than that of which he would bar the opening. 


70 


INDIVIDUAL AND NATIONAL INTERESTS 


A nation imports from a distance a manufactured commodity, 
which it is granted it could make as cheap, or cheaper, at home, 
were the manufacture introduced there. To introduce the man- 
ufacture is, however, too expensive a project to be carried into 
effect by any private individual. The whole society might do 
so, through the expenditure for a few years of a portion of its 
revenue, much less than what an equal number of years succeed- 
ing them will return to it in the diminished cost of the article. 
He, or they, who legislate for the society, embrace the apparent 
benefit, and, by means of a small expenditure, effect an increase 
of the productive powers of the community ; that is, they give 
those powers the capability of producing the same quantity of an 
article with less expense, which certainly must be allowed to be 
an increase of them. In this the legislator acts in a manner that 
would be accounted prudence in a private person, who conducted 
any system of industry for his own emolument : in a planter, for 
instance, who owned and managed a West India estate. We 
should undoubtedly approve of such a personas being at consid- 
erable expense, in instructing his overseers and negroes, in any 
improved mode of conducting the business of the plantation, if 
this improvement more than proportionably augmented his 
revenue. Neither have the proceedings of legislators, in many 
cases parallel in principle to this, been ever objected to. It 
sometimes happens, for instance, that those engaged in cultivating 
the ground know that they can procure seeds of plants, or races 
of animals, at a distance, better fitted for their purposes than 
those they have at home. If the expense of procuring them is 
small, and such as will be remunerated to an individual by the 
gain, individuals send for such seeds and animals. If it is greater, 
they sometimes club in societies for the purpose. If it be too 
great for these societies, the legislator aids them in their scheme, 
or carries it into effect himself. In this way it was, that, it being 
thought that the culture of the bread fruit tree, a plant indigenous 
to the Pacific Ocean, could it be introduced into our West India 
Islands, would be of advantage to them, government were at the 
expense of sending more than one vessel, on that long voyage, in 
order to transport the plant there. No one did, or could object, 
to the outlay of a portion of the public revenue for a purpose so 
laudable. In this instance, it will be allowed by all, that it would 
have been as absurd to have waited in expectation that some 


ARE NOT IDENTICAL. 


71 


individual should find, or should imagine he would find it for his 
own private advantage to undertake so expensive a scheme, as it 
would be to complain of the comparatively trifling expenditure 
of the common funds, which the accomplishment of this project 
conducive to the common good required. But the expenditure 
of a certain amount of national revenue, for the purpose of 
transporting an useful art from a distant country, bears, surely, 
s a close analogy to a similar expenditure, for the purpose of trans- 
porting an useful plant. If the one be praiseworthy, the other 
can scarce deserve the censure that has been heaped on it. 

Our author further observes : “ The natural advantages which 
one country has over another, in producing particular commodi- 
ties are sometimes so great that it is acknowledged by all the 
world to be in vain to struggle with them.” And, as an instance, 
he gives the project of raising grapes, for the purpose of making 
wine, in Scotland. 

Extreme cases are useful, but, to be so, they should be cor- 
rectly put. The main question in dispute is, whether or not it 
is proper to introduce - a manufacture from abroad, by the aid of 
the legislator, which, when so introduced, will furnish a com- 
modity for home consumption at as low, or at a lower price, than 
it can be bought for in the foreign country. The supposed case 
of a commodity which, if the manufacture of it be introduced at 
home, will cost thirty times more, or a thirtieth, or three hun- 
dredth part more there than abroad, can have nothing to do with 
the determination of such a question. 

“ Whether the advantages which one country has over another 
be natural or acquired, is in this respect of no consequence.” On 
the contrary, in my opinion, it is of the greatest consequence, 
and, for this very reason, that it is only “ as long as the one 
country has those advantages, and the other wants them, that it 
will be more advantageous ' for the latter rather to buy of the 
former than to make.” Now natural advantages cannot be pro- 
cured by any expenditure of revenue or capital, but acquired 
advantages may often be got by means of a very small expendi- 
ture. One country cannot, at any purchase, acquire the soil, 
the climate, the commodiousness of situation for conducting trade, 
or any of the other natural advantages which another country 
possesses ; were it so, the price would be very large that would 
not be willingly paid for them. But one country can often with 


72 


INDIVIDUAL AND NATIONAL INTERESTS 


ease, and at a trifling expense, acquire the practical skill and the 
knowledge of particular arts and manufactures which another 
possesses, and, by doing so, gain the advantage of procuring for 
itself the products of this skill and knowledge at home, instead of 
having to go abroad for them. In the passage quoted, natural 
advantages and acquired are reckoned equivalents, and so un- 
doubtedly they are. They are both valuable on account of the 
products they yield to human labor. But they differ in this, 
that the latter can be transferred from one country to another, 
the former cannot. Could Scotland acquire the sunny skies and 
more genial climate of France, its hills might be covered with 
vineyards, instead of heather, and its inhabitants might procure 
many commodities at a fourth of the price which they now cost 
them. No one would object to a considerable expenditure to 
acquire so great an advantage. If then, the acquisition of natural 
advantages would be worth paying for, why object to a small 
expenditure to procure advantages which are allowed to be 
equivalent to those natural advantages ? 

As the author has given one supposed case, as he conceived 
illustrative of the question, I may be permitted to give another, 
also illustrative of it, not like his, however, springing from 
assumptions liable to be objected to, but, as will be seen, framed 
upon his very principles and admissions. 

A certain country has the acquired advantage over another of 
possessing the knowledge of a particular art, which this other 
wants. The latter, therefore, imports from the former all the 
goods, the product of that art, which it has occasion for. As it 
has to pay for these goods, it luckily happens that it, on its side, 
has also acquired advantages in possessing the knowledge of 
another art, which the former wants, and the commodities pro- 
duced by which it has occasion for. In this way, the one sort of 
goods pays for the other. The natural and acquired advantages 
of these two countries are either similar or equivalent. That is, 
their soil, climate, convenience of situation for trade, and their 
knowledge of other arts, though not exactly the same, are on the 
whole equally balanced, their population and capital are equal. 
In short, they as much resemble two neighboring artificers, ac- 
cording to tho comparison of our author, exercising different 
trades, as extensive communities inhabiting separate countries 
well can resemble single workmen whose dwellings are con- 


ARE NOT IDENTICAL. 


73 


tiguous. The peculiar manufacture of the one nation is hats, of 
the other silk goods. The silk goods which the one annually 
consumes cost it £2,000,000 ; the hats which the other con- 
sumes, the same sum. Of these sums 25 per cent, is made up 
of transport, including in the term, not the mere freight, but the 
whole charges paid for internal transport, for warehousing, and 
for the profits of the different capitals, and wages of the various 
individuals concerned in collecting the commodities in the one 
country, carrying them to, and distributing them over the other. 
Thus the annual sum which these commodities cost each country, 
over and above the expense of producing them, is £400,000. 
In this situation things have long remained, and must continue to 
remain, unless altered by some change in the policy, or great 
revolution in the affairs of the two countries. “ It being only 
for the sake of profit that any man employs a capital in the sup- 
port of industry,” and, from the acquired advantages which each 
country enjoys over the other in the production of its peculiar 
manufacture, it being impossible for any projector to manufacture 
hats, in the country where hats have not hitherto been made, or 
silks, in the country where silks have not hitherto been made, 
but at an outlay of more than 25 per cent, over what they cost in 
the country where these respective manufactures are established, 
no such project will be entered on. The legislators of the two 
countries, have hitherto agreed with our author, that, as it is the 
maxim of every prudent master of a family, never to make at 
home what it will cost him more to make than to buy ; what is 
prudence in the conduct of every private family can scarce be 
folly in that of a great kingdom ; and that, whether the advan- 
tages which one country has over another be natural or acquired, 
is of no consequence, it being an acquired advantage only, which 
one artificer has over his neighbor, who exercises another trade, 
though they both find it for their advantage, rather to buy of one 
another, than to make what does not belong to their peculiar trade. 
Acting on these principles, they have thought it improper to make 
any alteration in the system. 

About this time however a change takes place in their opin- 
ions, and they begin to think, that as, though it would not be 
very prudent in the tailor, that he might have his shoes made in 
his own workshop instead of his neighbors, to set about making 
them himself, or the shoemaker, for the same reason, to set about 
10 


74 


INDIVIDUAL AND NATIONAL INTERESTS 


making his own coat, yet, if there were a town in which there 
were no shoemakers, but more than enough of tailors, and another, 
a dozen miles off, in which there were no tailors, but more than 
enough of shoemakers, it would be a beneficial change for some 
of the tailors to remove to the one town, and some of the shoe- 
makers to the other, that the inhabitants of both might have the 
articles fabricated by these different sorts of tradesmen, made at 
home, that is, within their respective towns, • — so, two countries, 
of which the one made no hats, and the other no silk goods, 
might mutually benefit by the introduction of the manufacture 
in which each was deficient, the inhabitants of each in like man- 
ner as the inhabitants of each town, having that provided at home, 
which they must otherwise go abroad for, and thus being saved 
like them, the expense and inconvenience of transportation. 

Though such a change, in either case, could not be brought 
about without expense, and though “ its immediate effect would 
therefore be to diminish the revenue of the society/’ yet, as after 
a certain time, it would be likely that the new manufacture would 
be made at home in each case “ as cheap or cheaper than 
abroad,” its ultimate effect would be, more than proportionably, 
to increase the revenues of both towns and both countries. 

Acting on these new views, the legislators of both countries, 
about the same time, commence encouraging the manufactures 
in which their respective countries are deficient ; and, by means 
of a system of premiums, bounties, and duties, on the detail of 
which it is unnecessary to enter, in the course of years, succeed 
so far, that silk goods come actually to be fabricated in the 
country where no silk goods were manufactured, as cheaply as 
where they were exclusively manufactured, and hats to be made, 
where no hats were made, as cheaply as where hats were ex- 
clusively made. Part of the capital and industry which went in 
the one case to the manufacture of hats, goes to manufacture 
silk goods, and, in the other case, part of the capital and industry 
which went to manufacture silk goods, goes to manufacture hats. 
Both countries produce that at home, which they before imported 
from abroad, and are therefore saved the expense attending that 
importation. 

Completely to effect this change requires an outlay, in both 
cases, of £1,000,000. Being effected however, it of course 
saves each country the expense of transport, which, at 25 per 


ARE NOT IDENTICAL. 


75 


cent, on the imported goods, makes an annual saving of its ex- 
penditure, and increase therefore of its revenue, of £400,000, 
so that, in two or three years time, the sum expended is repaid, 
and each community supplied with a new fund to furnish addi- 
tional comforts to its members, or to add to their capital. 
According to our author’s tenets, this proceeding of both legisla- 
tors, although admitted to be practicable, is yet held to be ne- 
cessarily, and in its very nature, injurious. 

Although it can seldom happen, that two countries are so 
circumstanced that both, according to our supposition, can ben- 
efit equally by the effecting of such a change, yet, if one effect 
such a change, as far as that country is concerned it would seem 
to be beneficial, on a simple calculation of expense and gain, 
provided the saving of revenue produced by it, is greater than 
the expenditure of revenue necessary for producing it. It is this end 
which the legislator generally aims at reaching by the regulations 
he imposes on the trade and industry of the society, and which, by 
these means, he often arrives at. Yet, even when in such cases 
successful, our author maintains, that his proceedings are neces- 
sarily, and essentially prejudicial to the interests of the society. 
That, even though they may cause a commodity to be produced 
at home, cheaper 'than abroad, they must diminish, instead of 
augmenting, the national revenue and riches. A conclusion so 
extraordinary, is arrived at by a process of reasoning as extra- 
ordinary. It is come to by setting out from it. Two general 
axioms, somewhat ambiguous and vague, are assumed as truths. As 
usually happens to all other axioms employed in general reasoning, 
and capable of conveying two senses, they are granted in the one 
sense, and applied in the other. We assent to the propositions, “ the 
industry of the society can augment only in proportion as its capital 
augments, and its capital can augment only in proportion to what 
can be gradually saved out of its revenue,” because we see, that 
the augmentation of industry and capital, the saving from rev- 
enue and increase of capital, are concomitants of each other ; we 
perceive not, that in the application of these propositions, the 
sense in which we assented to them is abandoned, and that the 
augmentation of the capital of the society is assumed as the 
cause, and the Bole cause of the increase of its industry, and 
the saving from revenue, as the cause, and the sole cause, of the 
augmentation of its capital. Whereas, from the observation of 


76 


INDIVIDUAL AND NATIONAL INTERESTS 


the increase of the productiveness of national industry, and of 
the amount of national capital, going on in general together, we 
may at least as justly infer that it is the industry which augments 
the capital, as the capital the industry, and rather come to the 
conclusion, that part of the national resources should be employed 
in giving perfection to the industry of the society than that they 
should be altogether devoted to attempts to increase its capital. 
In fact, as capital, according to Adam Smith himself, is only 
valuable for the addition it makes to the efficiency of the national 
industry, and, as that efficiency is also, according to him, mainly 
dependent on the skill, dexterity, and judgment, with which it is 
applied, an expenditure of capital or revenue, having the effect 
of increasing the national skill, dexterity, and judgment, would 
seem to be the most judicious possible, seeing it directly increases 
those sources of production, from the indirect addition that it 
makes to which, capital is said to derive its sole value. 

It has been my endeavor to show, in the preceding examina- 
tion of the system of Adam Smith, that the doctrine there main- 
tained, of the expediency of the legislator’s abstaining from any 
attempt to give increased efficiency to the industry of the society 
by encouraging the growth of domestic arts or the importation of 
foreign, founded on the supposition of the perfect identity of the 
means which add to the wealth of individuals and nations, is 
erroneous. 

1. That the reasonings which make it assume the form of a 
self-evident principle, have their foundation in the ambiguities of 
language alone, and that, in reality, the presumption is against, 
not for it. 

2. That viewed as a consequence of the theory of the accu- 
mulation of capital, the division of labor, and the improvements 
resulting from the action and reaction of these principles on each 
other, the judgment we form of it must be altogether determined 
by the probable accuracy of the principles on which that theory 
proceeds, and by its coincidence with facts ; that granting, for the 
present, the apparent probability of the theoretical principles 
themselves, they nevertheless do not agree with the phenomena • 
that there is a class of admitted facts, which they not only do not 
explain, but to which they are in opposition; that the increase of 
the wealth of every community is acknowledged to be dependent, 


ARE NOT IDENTICAL. 


77 


not only on the accumulation of capital and division of labor 
among its members, but also on the progress of arts in other 
communities, and their subsequent transfer to it ; that to effect 
this transfer, a measure admitted to be all-important to the pros- 
perity of the community, the efforts of individuals are insufficient, 
that, in his endeavors to prove that the legislator ought not here 
to interfere, Adam Smith runs into inconsistencies and contradic- 
tions, and that there hence arises a proof of the inapplicability of 
his doctrine to events of this order, and a strong presumption of 
the existence of some fundamental error in the general principles 
of his system. 


BOOK II. 


OF THE NATURE OF STOCK, AND OF THE LAWS GOVERNING ITS INCREASE 
AND DIMINUTION. 


INTRODUCTION. 


Dugald Stewart prefaces the observations he makes on Adam 
Smith’s great work, with the following remarks : “ An historical 
review of the different forms under which human affairs have ap- 
peared in different ages and nations, naturally suggests the question, 
whether the experience of former times may not now furnish some 
general principles to enlighten and direct the policy of future 
legislators ? The discussion, however, to which this question leads, 
is of singular difficulty ; as it requires an accurate analysis of by 
far the most complicated class of phenomena that can possibly 
engage our attention, those which result from the intricate and 
often the imperceptible mechanism of political society ; — a subject 
of observation which seems, at first view, so little commensurate 
to our faculties, that it has been generally regarded with the same 
passive emotions of wonder and submission with which, in the 
material world, we survey the effects produced by the mysterious 
and uncontrollable operation of physical causes.” * The science 
of Political Economy he considers as a part of this great subject. 

If the accuracy of these observations be admitted, as I think it 
must, the inquiries in which Political Economy engages, lead to the 
investigation of the general principles of human action, and it is to be 
considered but as a branch of a larger science, having for its object, 
to trace the laws to which man is subject as a moral and intellectual 
animal, acted on by the system of things existing in the world, and 
acting, in turn on them, to explain from those laws the events which 
his past history, as far as known, exhibits, and to collect the means 
of ascertaining what will be the future course of it. While to be 
able clearly to unfold the laws regulating the events with which it 
deals would imply the capacity of tracing those regulating the 
whole system of phenomena of which man is the centre, just as 
to explain with accuracy the laws regulating the motions of one of 
the heavenly bodies, implies the knowledge of principles capable 
of disclosing the prescribed movements of them all. 


Life of Smith. 


INTRODUCTION TO BOOK II. 


79 


I have already observed, that the subject first met me when 
engaged in the investigation of some principles which I conceived 
might in time assume a form capable of a general application of 
the sort. To attempt here an extensive generalization of this 
kind would be out of place, and is impracticable, because of 
necessity only a small portion of the phenomena are before us. 
Political Economy itself makes but a part of the subject to which 
such generalizations belong, and it is only one division of political 
economy of which we are to treat. It has usually been discussed 
under the heads of stock, wages of labor, and rent, and it is to the 
first of these that our investigations are to be altogether confined. 
It is only therefore in such parts of the subject as present a suffi- 
cient mass of phenomena, to warrant the procedure, that I shall 
attempt to introduce any very general principles. In other cases 
1 will confine myself to the simple statement of facts admitted by 
all parties. 


V 


CHAPTER I. 


IT IS CHARACTERISTIC OF MAN TO PROVIDE FOR THE WANTS OF THE 
FUTURE, BY THE FORMATION OF INSTRUMENTS 5 AND HIS POWER TO 
MAKE THIS PROVISION, IS MEASURED, BY THE EXTENT AND ACCURACY 
OF HIS KNOWLEDGE OF THE COURSE OF NATURAL EVENTS. 

Cicero gives the following summary of the principles exciting 
man to action, and of the mode in which they lead him to act : 

“ inter hominem et beluam hoc maxime interest, quod haec 

tantum, quantum sensu movetur, ad id solum, quod adest, quod- 
que praesens est, se accommodat, paullulum admodum sentiens 
praeteritum, aut futurum. Homo autem, quod rationis est par- 
ticeps, per quam consequentia cernit, causas rerum videt, earum- 
que progressus, et quasi antecessiones non ignorat, similitudines 
comparat, et rebus praesentibus adjungit atque annectit futuras : 
facile totius vitae cursum videt, ad eamque degendam praeparet 
res necessarias. Eademque natura vi rationis hominem conciliat 
homini et ad orationis, et ad vitae societatem : ingeneratque in 
primis praecipuum quendam amorem in eos, qui procreati sunt : 
impellitque, ut hominum coetus, et celebrationes, esse, et a se 
. obiri velit : ob easque causas studeat parare ea, quae suppeditent 
et ad cultum, et ad victum : nec sibi soli, sed conjugi, liberis, 
ceterisque, quos caros habeat, tuerique debeat. 5 ’ 

“ The chief distinction betweem man and the inferior animals 
consists in this. They are moved only by the immediate im- 
pressions of sense, and, as its impulses prompt, seek to gratify 
them from the objects before them, scarce regarding the future, 
or endeavoring from the experience of the past to provide against 
what is to come. Man again, as he is endowed with reason, by 
which he is able to connect effects with their causes, to perceive 
the principles which guide the progress of affairs, and to join to- 
gether the present and the future, easily discerns the course of 
his whole life and prepares whatever may be necessary for pass- 


OF THE NATURE OF STOCK. 


81 


ing it in comfort. The same intellectual powers also, which 
nature has bestowed on him, give scope to his affections, and 
join him to his fellows by the ties that spring from language and 
the connexions of social life. It is from this source that we must 
trace his peculiar provident love for his offspring, his concern 
for the interests of society, and his desire to mingle in its business 
and pleasures. 

“ From these principles it is that man is incited and enabled 
to provide beforehand whatever may be requisite both for utility 
and ornament, not only to himself but to his wife, his children, 
and all others who may be dear to him, or whom it may be his 
duty to protect.” 

It is unquestionably the capacity for perceiving, and retaining 
in his mind, the course of events and the connexion of one with 
another, that leads man to perceive what advancing futurity is to 
bring forth, and enables him to provide for its wants. This pro- 
vident forethought distinguishes him from the inferior animals, 
and the degree in which he possesses it marks his rank in the 
scale of civilization. 

When he has gained any knowledge of the nature of things 
around him, he finds many that satisfy more or less perfectly his 
present wants. He knows also that if he live to see the future 
he will then have similar wants and desires. Some of the things 
satisfying his desires and wants exist abundantly ; others, sparingly 
or imperfectly. If he ^regard the future, he must wish that those 
things of which he now can only obtain enough to satisfy his 
wants sparingly and imperfectly, should exist then, so as that he 
might be able to obtain them to satisfy those wants abundantly 
and perfectly. 

His faculties of observation and reason generally give him the 
power of effecting this. For these objects of his desires are mere 
arrangements of matter. His faculties of observation show him 
their nature, and the manner in which the train of events going 
on amongst them succeed each other. He perceives that the 
things which are the objects of his present wants, or which were 
of those he felt a little time since, and which will probably be of 
those he will feel in future, are either the immediate result of the 
nature and form of some things around him, or of the trains of 
events which, in consequence of that form and nature, are taking 
place among them. He cannot alter the nature of things, but, 
11 


82 


OF THE NATURE OF STOCK. 


in many cases, he is able to change their form, that is, the par- 
ticular arrangement of the matter of which they are formed, and 
his reason instructs him, that if, by doing this, he can so alter the 
trains of events, proceeding from them or depending on them, that 
they may either form, or cause to be formed, or put in his pos- 
session, objects fitted to supply more perfectly or abundantly what 
probably will be his future wants, than those objects would other- 
wise exist, he then is able to provide for the future. This in 
many cases he can do, and thus he acts. 

A North American Indian in his canoe comes to an island in 
some lake or river, and finds near it a good station for fishing. 
He therefore determines to remain there for the fishing season. 
Towards evening he paddles his canoe to shore, lands, kindles a 
fire near a large tree, wraps his blanket about him, places his feet 
to the fire, his head to the trunk of the tree, and thus prepares 
for repose. In so doing, with the exception of kindling the fire, 
he takes advantage simply of his knowledge of the nature of 
the things around him, and seeks from them the best supply they 
can give him of what he wants, that is, of shelter from wind and 
weather. 

It rains and blows during the night, the tree shelters him 
somewhat, but still he gets cold and wet. In the morning he 
spends some hours providing a better shelter against the incle- 
mency of any such night in future. Of branches and bark he 
makes something like one half of the roof of a house, only much 
smaller, the open side being towards the south and the fire, the 
sloping side towards the north from whence comes cold and rain. 
Thus, though he cannot prevent the wind from blowing, or the 
rain from falling, his knowledge of the manner in which the 
trains of events forming these phenomena succeed each other, or 
if you will, his knowledge of the laws which regulate their mo- 
tions, instruct him so to direct them, that the one shall not blow, 
or the other fall, on a particular spot, which he knows he may 
at some future time wish to remain calm and dry. This time 
may be distant, for it may not rain or blow so as to inconvenience 
him for a week or two, nevertheless to provide against it he 
gives a good many hours present labor. 

Next evening, before going to repose, he finds the turf damp 
from the rain of the former night. He looks for an elm tree, 
cuts off a piece of its strong thick bark large enough for him to 


OF THE NATURE OF STOCK. 


83 


sleep on, covers it with the soft branches and leaves of the white 
pine, and forms a dry and soft bed for himself. Thus his know- 
ledge of the materials around him enables him to form what he 
wants, a dry and soft place of repose. 

In this island he discovers a small wild plumb tree, he relishes 
the fruit, but there is little of it. Resolving to return in succeeding 
seasons he lops the branches of the surrounding trees to give this 
room to spread, and expects thus to find next year a more abundant 
crop.* Here his knowledge of the manner in which trees and 
fruit grow and thrive, or his knowledge of the order of the trains 
of events which terminate in the full developement of the tree and 
abundance of its fruit, enables him so to work on the matters 
around him, as to occasion them to produce more abundantly next 
season, than they have this, what then he will desire. 

He thinks not of providing for any future want the means to 
supply which, will, without this, exist in sufficient abundance. 
Thus water, in such a situation, he knows he will always be sur- 
rounded with. Were the same Indian encamped in the woods, 
by a very scanty spring, he would dam it up, and cover it with 
branches so as to keep cool a quantity of water for his future occa- 
sions. 

The proceedings of man are every where similar. He has 
always an end in view, he employs means to effect this end, and 
there is a manner through which he effects it. The end is a 
supply for future wants ; the means, the bringing about of such 
events as may serve to supply them ; the manner, a knowledge 
of the qualities with which nature has endowed the materials 
within his reach, of the series of events in consequence arising 
among them, and an application of this knowledge to produce, 
through his corporeal powers, such an arrangement of these mate- 
rials, as may so change the issues of events that would otherwise 
have place, as to bring about those which he desires. It is true, 
that, in most instances, men simply copy the proceedings of others, 
and think not of the principles on which they conduct their opera- 
tions, nor of the observations from which these must originally 
have been deduced. But, though the knowledge thus acquired 
from this storing of observations, and deduction of principles from 

* This is a possible supposition, but it is more probable he would neglect 
it, perhaps cut it down for the sake of reaching more easily the fruit it carried. 


84 


OF THE NATURE OF STOCK. 


them, is not the mode in which individual men operate, it is the 
mode in which the operations they carry on must have been first 
brought into practice, and on which they ar^ all founded. 

We may easily satisfy ourselves of this, by turning our atten- 
tion to the manner in which any of the articles we use for the 
supply of our wants has been formed. Bread may be an example. 
A farmer, some two years ago, made choice of a particular field 
for the cultivation of wheat. Had he been asked why he did so, 
he could have stated the different circumstances in the soil, and 
the previous crops that it had carried, which had thus determined 
him. By ploughing and harrowing it a sufficient number of times, 
he thoroughly broke, and pulverized the land. This he did, be- 
cause he knew, from observations he or others had made, that in 
this state the seed he intended to deposite there would, when it 
came to germinate, more easily spread its roots around, and draw 
nourishment from among the particles of earth amidst which it 
would grow. He allowed a considerable time to elapse between 
the several operations, that the weeds might have time to spring 
up, and be destroyed. Thus he knew they would be prevented 
from afterwards injuring the growth of the crop. He also spread 
over the field, and covered in, a quantity of manure, because ex- 
perience had taught that this substance gives vigor to vegetation. 
He then sowed the seed, in the mode, and quantity, and at the 
time, which observation had instructed him was the best, covered 
it with a harrow, and waited the harvest. When he perceived 
the grain sufficiently ripe, he cut it down with an iron hook 
having a form and edge which experience had ascertained to be 
best adapted for this purpose, made it into bundles, exposed 
them to the sun and air so that they might be dried, when this 
was effected, conveyed them to his barn and stored them there. 
Having lain there some time, the grain was separated from the 
straw by the process of threshing, it was then carried to the 
granary, where, having been kept for a longer or shorter period, 
it was thence taken to the mill, and, by a very ingenious process, 
reduced to small particles, and then separated by another pro- 
cess into three parts, of which the finest part, the interior of the 
grain called flour, being packed in sacks or barrels, was preserved 
for use. A certain portion of this, mixed with a particular fer- 
ment, wrought with the hand and exposed to the action of fire, 
became bread. 


OF THE NATURE OF STOCK. 


85 


It is very evident, that all the steps of these various processes 
depend on a knowledge of the course of natural events, and are 
regulated by that knowledge. A long series of observations of 
this sort, and of reasonings deduced from them, could alone have 
enabled the farmer to prepare the ground properly for the seed, 
or, after the grain had come to maturity, to preserve it, to sep- 
arate it from the straw, and fit it for being converted into flour. 
The observations on the trains of events connected with the pro- 
duction of this grain that have been committed to writing, fill 
many large volumes, and besides these, every farmer is obliged 
to have a great store of his own, to guide him in his proceedings. 
Thus, in the single process of cutting down and storing up this 
crop, his success in securing it uninjured depends on observing 
and noting well a great variety of particulars. He observes the 
plant carefully, and discovers, from the appearance of every part, 
from the dryness of the stem, the drooping of the ears, the ful- 
ness of the grain, if it be in a proper state to cut down. If he 
make any error in this, he will either have unripe, and therefore 
shrivelled and light grain, or he will lose great part of it by its 
being shaken off the stem in harvesting it. Next, before he 
determine on commencing the operation, he regards the aspect 
of the sky, watches the rising and setting sun, notes the color of 
the air, the appearance of the clouds, the direction of the wind, 
the dew on the grass, and perhaps has recourse to that delicate 
instrument, the fruit of so many ingenious observations, the 
barometer. By means of all these, he is enabled to draw 
tolerably correct conclusions, in regard to the probable state of 
the weather for some succeeding days. This knowledge influ- 
ences greatly his farther operations ; for experience has taught 
him that the injury which severe rains, coming on the grain 
when newly reaped, would occasion, is very great. If, there- 
fore, the weather promise to be fine, he will commence cutting 
it down a few days sooner than he otherwise would ; if rain 
threaten he will wait a few days longer. When he has it reaped 
he gets it tied into bundles, which are put up in small parcels, 
and so disposed, that the wind may penetrate through them, and 
the rain be as much thrown off from them as possible, and thus 
the plant may have the best chance of being securely and quickly 
dried. 

This drying is watched with care, and, when it is judged to 


86 


OF THE NATURE OF STOCK. 


be sufficiently advanced, the crop is transported to the barn, 
there to wait till the proper period of threshing it out arrives. 
All fhese processes are, it is evident, governed by rules drawn 
from assiduous and long continued observation, and their success 
depends on its extent and accuracy. 

Were we to examine the manner in which all the articles that 
we provide for the supply of future wants are produced, we 
should find that they depend, in this way, on observations on the 
course of events, and on reasonings founded on these observa- 
tions. Were proof wanting of this, we might turn at hazard to 
any complete treatise on any art. On examining it, we would 
invariably find it to contain a set of observations, the result of 
experience, and of reasonings, and rules, drawn from these ob- 
servations. 

Since then man provides a supply for his future wants by his 
reason directing his industry, through means of his knowledge of 
the course of events, to effect such changes in the form or 
arrangement of the parts of material objects, that these may pro- 
duce articles fitted to afford this supply, it were desirable to have 
some common name to denote all the changes, which, for this 
purpose, he so makes. On this account I propose to give the 
denomination of instruments to all those changes that, for this 
purpose are made in the form or arrangement of the parts of 
material objects. 

The term instrument is, in general, properly enough employed, 
to denote any means for the attainment of some end. In com- 
mon use, however, and as applied to material things, it seems to 
be restricted to such arrangements of matter as owe their chief 
efficacy to what are called the mechanic powers. Thus a lever 
or a wedge is an instrument, the manner in which each of them 
operate being chiefly explained on mathematical principles. A 
spade, which is a combination of the two, is also an instrument. 
The tools which carpenters use are instruments. We speak in 
the same way of instruments of husbandry, meaning by the 
phrase the articles used in that art, whose properties may be 
explained on mechanical principles. 

In all these cases, however, other principles than those which 
are merely mathematical must enter into our calculations. In 
the simplest lever, we have not only the properties of a mathe- 
matical line to consider, but also, the weight and strength of the 


OF THE NATURE OF STOCK. 


8T 


substance used, and these make the difficulty in the proper ap- 
plication of such an instrument. A wedge operates in many 
ways, besides those that may be considered to be derived simply 
from mathematical principles ; as for instance in the percussion, 
which it receives and communicates, and through means of which, 
if skilfully applied, the most solid rocks may be rent.. The far- 
ther we recede from such simple instruments, the more extensive 
do we find the action of properties, which could only be ascer- 
tained by a long series of observations. It would be impossible, 
for instance, to give any a priori rules for the construction of 
that most useful instrument the plough. It is, no doubt, a wedge, 
but the particular form giving the greatest efficacy to it, is a point 
of very difficult determination, not y^t, perhaps, fully ascertained. 
It is accurate observation that has guided the construction of it, 
to its present efficiency, and which may be expected to render it 
still more perfect. 

Were we to enter into an examination of more complicated 
machines or instruments, such as the steam engine, or the cotton 
mill, the* observation would apply with double force, these gen- 
erally deriving their efficiency from principles, that have been 
the result of very extensive and accurate investigations of many 
series of events. In thus using the term, therefore, we shall 
rather deviate somewhat from common usage, than be opposed 
to it, and in doing so, our reasonings will only be subject to an 
inconvenience, to which all general reasonings must be subject, 
and which may be the more readily excused, as this use of the 
term may be defended from its derivation, its occasional accepta- 
tion, and the authority of authors of respectability.* 

In general then, all those changes which man makes, in the 
form or arrangements of the parts of material objects, for the 
purpose of supplying his future wants, and which derive their 
power of doing this from his knowledge of the course of events, 
and the changes which his labor, guided by his reason, is hence 
enabled to make in the issue of these events, may be termed 
instruments. 

In this sense a field is an instrument. The changes effected 
in the matters of which it is composed, for the purpose of render- 
ing it an instrument, are the levelling and if necessary making 


Note E. 


88 


OF THE NATURE OF STOCK. 


the surface dry by means of ditches and drains, the removing 
stones from it, the mixing and pulverizing the soil by the plough, 
the harrow, and the roller, and the incorporating with it various 
matters termed manures, which render it more fit for the support 
of vegetable life. The future wants, towards the supply of which 
it is an instrument, are food and clothing. The power which has 
made it an instrument, is the agriculturist’s labor, directed by his 
knowledge of the nature of plants and soils. The change made 
in the consequent issue of events, is the abundant growth of 
specieses of plants different from those originally produced by it, 
and conducing to the supply of food and clothing, or, more gen- 
erally, the conversion of various vegetable matters of the soil, and 
gaseous matters in the air, into the substance of particular plants. 
The wdieat grown on this field is an instrument. The changes 
effected in it, are its having been separated from the straw by the 
process of threshing, and its having been made sufficiently dry by 
keeping and exposure to air, to be fit to manufacture into flour. 
The want it tends to supply is nourishment, by affording bran for 
the support of some of the inferior animals, as hogs or cattle, 
afterwards to be slaughtered, and flour for the use of man. The 
power is also the art and industry of the agriculturist. The 
change in the issue of events consists in the grain being ready for 
the manufacture of flour, instead of having been left to rot on the 
ground, to be consumed by vermin, or destroyed by the access of 
damp or by the want of air. Flour also is an instrument. The 
changes that have been effected on it are its having been separ- 
ated from the wheat, and reduced to a fine powdery matter. The 
want it tends to supply is food by the bread' produced from it. 
The power, which has operated on it, is the art and industry of 
the miller. The change in the issue of events thereby produced 
is the existence of flour and bran, instead of wheat. Bread, until 
such time as it is in process of consumption, is an instrument. 
The change which it has undergone is that induced by the pro- 
cesses of kneading, fermenting, and baking. The want it supplies 
is food. The power which has operated on it is the art and in- 
dustry of the baker. The change on the issue of events thereby 
produced is the existence of bread, instead of flour. 

Though it may seem strange to rank all these in one class, that 
of instruments, nevertheless, the doing so is rather unusual than 
improper. They are all means toward the attainment of an end, 


OF THE NATURE OF STOCK. 


89 


and, for the attainment of this end, that is, the production of 
bread, do they alone exist. The blade as it springs from the 
soil, and the soil on which it grows, form together an instrument 
for this end, the plant when it has extracted all the nourishment 
from the soil which that can give, and is ripe on the ground, is an 
instrument ; when it is cut and put up sheltered from the weather, 
it is still an instrument ; so is the grain when separated from it ; 
so it is when ground in the mill ; so it is when in loaves, put apart 
for consumption, until the moment arrives when it is consumed. 
It is impossible, if we call it at first an instrument, to point out 
when it ceases to be so, until the moment when it is actually 
consuming. 

All tools and machines are instruments. Thus a carpenter’s 
saw is an instrument. The changes effected in the matters of 
which it is composed, for the purpose of rendering it an instru- 
ment, are, there having been given a fit form and temper to the 
steel plate of which it is made and a handle having been adjusted 
to it. The wants which it tends to supply are multifarious, ac- 
cording to the uses to which it is put. The power that renders 
it an instrument is the art and industry of him who makes, and 
of him who uses it. The changes effected in the issue of events 
by its fabrication and use, are the dividing into regular parts suited 
to different purposes, a great number of pieces of timber. 

In a similar manner it might be shown, that houses, ships, 
cattle, gardens, household furniture, manufactories, manufactured 
goods, and stores of all sorts are in this sense, instruments. 
But it is, I apprehend, unnecessary further to multiply instances ; 
every thing that man, for the purpose of gaining an end, brings 
to exist, or alters in its form, its position, or in the arrangement 
of its parts, is an instrument. 

As man is thus enabled to provide for the wants of futurity, 
by his knowledge of the course of events, it naturally follows, 
that in any particular situation, his power to provide for them, is 
measured by the extent and accuracy of his knowledge. If that 
knowledge be diminished, his power will be diminished. Thus 
a deficiency of skill in the art of agriculture, or of baking, will 
alike occasion a diminution of the quantity of food to be got from 
a field applied to the cultivation of wheat. Neither can his 
power be increased, but by an increase of his knowledge. It is 
impossible to point out any improvement in any art, which does 

12 


90 


OF THE NATURE OF STOCK. 


not depend on some new observations, or reasonings, on the 
course of events connected with that art. 

The generally admitted axiom, that knowledge is power, may 
not be strictly true. Many facts have been observed which have 
not yet been applied to any useful purpose, though it is probable 
they will, in time, be so applied. But, though it may not be 
strictly true, that all knowledge immediately gives power, it is so, 
that all power springs from knowledge, and is measured by its 
extent and accuracy. Neither can it be disputed, that it operates 
by enabling man’s reasoning faculties, so to direct his industry, 
as to induce certain changes in the form and arrangement of the 
parts of material objects converting them into instruments. “ Ad 
opera nil aliud potest homo, quam ut corpora naturalia admoveat 
et amoveat ; reliqua natura intus transigit.” 


CHAPTER II. 


’QF THE CIRCUMSTANCES COMMON TO ALL INSTRUMENTS, AND OF THOSE 
PROPER TO SOME. 

All instruments agree in the following three particulars : 

1. They are all either directly formed by human labor, or 
indirectly through the aid of other instruments themselves formed 
by human labor. 

Sometimes, though rarely, instruments are constructed by labor 
alone. Thus occasionally rough stone fences are put up, by the 
hand alone, without the intervention of even a single tool. But, 
in most instances, the aid of other instruments is employed. It 
is seldom, that even the most common laborer is not assisted in 
his operations by some implement or another. But, whatever 
instrument or instruments may have cooperated with labor'in the 
formation of any other instrument, they themselves have been 
either altogether, or in part, formed by labor ; and, by retracing 
the course of things farther and farther back, we inevitably come 
to the conclusion, that labor was, in this sense, u the first price, 
the original purchase money that was paid for all things/’ and 
thus that, directly or indirectly, it is to be looked on as the agent 
that gives form to every instrument. 

For the sake of simplifying the succeeding speculations, as 
much as may be, labor will be considered as the agent employed 
in the formation of all instruments. When the cooperation of 
other instruments is implied in the means by which any particu- 
lar instrument is constructed, the degree in which they cooperate 
is understood to be measured by the quantity of labor for which 
their cooperation is, or might be, procured : and, in this sense, 
that cooperation is spoken of as an equivalent to labor. The 
rules, according to which the one thus measures the other, will 
be discussed subsequently. 


92 OF THE CIRCUMSTANCES COMMON AND PROPER 

2. All instruments bring to pass, or tend, or help, to bring to 
pass events supplying some of the wants of man, and are then 
exhausted. 

Some instruments, without the intervention either of labor or 
of other instruments, produce events which directly supply our 
wants. Thus a peach tree yields its fruit to our hand. The 
operation of others only tends to the production of events supply- 
ing our wants. The growth of a crop of wheat is only a step 
towards the production of bread. Others require the help of 
either labor, or some other instrument. A row boat is useless 
without the labor of the man who plies the oar ; a carriage, with- 
out the cooperation of the horses who draw it. All instruments; 
however, either produce, or contribute to the production, of events 
supplying some of our wants. Their power to produce such 
events, or the amount of them that they do produce, may be 
termed their capacity. 

It is necessary to have some common measure for the purpose 
of comparing the capacity of instruments or the returns that are 
made by them, with the labor or its equivalents that went to 
form them. For this purpose, also, labor will be adopted, and 
the events brought to pass by any instrument will be estimated 
by the amount of labor to which they are esteemed equivalent 
by the owner of the instrument. As we proceed, it will appear, 
that this use of the term has no other effect than that of giving 
distinctness to our nomenclature. Besides, it often really hap- 
pens, that the returns made by instruments, directly compare with 
labor, because they directly save labor. For instance, wooden 
or metal pipes are occasionally used to conduct water from a 
spring to some dwelling-house. Were they not there, the water 
would have to be carried within the dwelling by some of the 
domestics, and therefore the instrument formed by the pipes may 
be said indifferently, either to supply a certain amount of water, 
or save a certain portion of labor. 

With one considerable exception, afterwards to be noted, all 
instruments at length bring to pass, or aid in bringing to pass, all 
the events which they can bring, or can help to bring to pass. 
I shall use the term exhaustion , to denote this passage of things 
from the class of instruments, into things which are not instru- 
ments. When an instrument is said to be exhausted, it is meant 
that the matters of which it was composed have passed out of the 
class of instruments into that of materials. 


TO ALL INSTRUMENTS. 


93 


Sometimes they pass from the one class to the other suddenly. 
Thus, articles used for food and fuel, bring to pass all the events 
for which they were formed, very shortly. The appetite of 
hunger is gratified, and heat is communicated to the frame, in a 
few minutes, and the faggot and the bread, having yielded all 
the nourishment and heat stored up in them, then cease to be 
instruments. Gunpowder brings certain events to an issue 
instantaneously. The bullet is discharged, and the rock split, 
in an instant. This sudden and complete exhaustion of the 
capacity of instruments is what is usually termed consumption. 
Sometimes the matters of which instruments are formed pass 
from the class of instruments to that of materials by degrees. 
Thus tools and articles of wearing apparel are in use for a long 
time before they cease to be instruments. A saw may be in 
employment for years ; a hat defends the head for months. 
When the capacity of instruments is thus gradually exhausted, 
it is usually said that they are worn out, and this sort of exhaus- 
tion is termed wear. 

Sometimes the capacity of instruments is accidentally done 
away with, and they consequently pass out of the class of instru- 
ments, without being exhausted. Thus a house may be burned, 
cloth may be eaten by vermin. They are then said to be destroyed. 
A partial degree of this is damage. In calculating the capacity 
of instruments, it is necessary to reckon the risk they run of 
destruction or damage. In any estimation of the capacity, for 
instance, of a crop of wheat, we have to make as accurate an 
allowance as may be, for the risk of its destruction or damage, 
by the inclemency of the weather or other accidents, before the 
harvesting of it be accomplished. 

3. Between the formation and exhaustion of instruments a 
space of time intervenes. This necessarily happens because all 
events take place in time. Sometimes that space extends to 
years, sometimes to months, occasionally to shorter periods, but it 
always exists. 

The circumstances we have hitherto assumed as common to 
all instruments, and the events they generate, will, I believe, on 
examination, be found actually to be so. There is one circum- 
stance, however, which it is necessary to assume as common to 
them all, and which in reality is not altogether so. In comparing 
the capacity of two or more instruments, which supply, or tend to 


94 OF THE CIRCUMSTANCES COMMON AND PROPER, &c. 

supply, wants of the same sort, we may very often measure them 
by the relative physical effects, resulting from the action of the 
events brought to pass by them. Thus, if the consumption of 
one cord of fire wood, of a particular sort, is capable of producing 
exactly double the heat which the consumption of another cord 
of another sort produces, a cord of the former, will have double 
the capacity of a cord of the latter, and, if the one be equivalent 
to four, the other will be equivalent to exactly two days labor. 
In the same way, a log of timber from Norway, about to be em- 
ployed in the construction of a house, if of equal size, strength, 
and durability, with another from Prussia, may, with justice be 
considered as of equal capacity to it ; and so of many other in- 
struments. We shall see afterwards, however, that this mode of 
determining the capacity of similar instruments, is in many cases 
incorrect, and that the instances are very numerous, w T here the 
relative capacities of instruments of the same sort, depend on 
other causes than their mere physical properties. The assump- 
tion, therefore, that they may be so determined, is to be considered 
as hypothetical, and to be tolerated from the difficulty of other- 
wise treating the subject ; in the same manner as the hypothetic 
existence, of strictly mathematical lines, and the absence of fric- 
tion and of the resistance of the air, is excused, in reasonings 
concerning the mechanical properties of matter. As in these 
reasonings, an attempt will be made to ascertain the extent, and 
mode of operation of those other causes ; and, having traced 
what seem to be the great moving powers, and the laws govern- 
ing them, we shall endeavor to discover the circumstances which 
retard or derange their motions. 

It may be proper here to notice the acceptation, in which two 
other terms of frequent subsequent occurrence, are to be received. 
Some instruments are easily moved from place to place, and, on 
this account, there are peculiar facilities, in exchanging them with 
others. This seems to be the character distinguishing what are 
called goods, or commodities, from other instruments, and it is in 
this sense, that these terms will, in the subsequent pages, be em- 
ployed. 


CHAPTER III. 


OF CERTAIN CIRCUMSTANCES ARISING FROM THE INSTITUTION OF SOCIETY. 

1. Man hardly exists but in the social state. If separated 
from infancy from his fellows, his peculiar faculties scarcely at 
all develop themselves. His mental and bodily capacities and 
energies seem, also, to be moulded by the condition of the society 
of which he is a member. We may venture to predict, that 
three children born tomorrow, one in Caffraria, another in China, 
and a third in London, and remaining in their respective countries 
till the age of twenty, will be very different beings, and that each 
will possess the mental and bodily peculiarities, that characterize 
the particular community to which he belongs. The same 
things, though in a lesser degree, hold true concerning the men 
composing every nation. Whether these characteristics of different 
races, tribes, and peoples, proceed altogether from some peculiar 
hereditary conformation of the bodily organs, or from the effects 
of education, example, and habit, or from the combination of these, 
or from other causes, it is very certain that they exist, and that 
the moral and intellectual condition, as well as the bodily organi- 
zation of men, vary, as they belong to this, or that society. Be- 
sides this, institutions, forms of government, and laws, influence 
somewhat the genius, and considerably affect the conduct, of 
every people, and these also are very various. It thus happens 
that every society has, what may be termed, a distinctive charac- 
ter of its own. 

It is therefore assumed, in the succeeding investigations, that 
the moral and intellectual powers, the knowledge, the habits and 
dispositions of the men composing every separate community, 
society, nation, state, or people, terms which, as far as our subject 
is concerned, may be considered synonymous, are such as to give 


96 


CIRCUMSTANCES ARISING FROM 


it a peculiar character distinguishing it from other communities. 
It is also assumed, that the average character of the members of 
different portions of the same community is similar, so that, were 
a considerable number of the inhabitants of any particular state, 
taken from one part of its territories, they would closely resemble 
an equal number, taken from any other part. This latter assump- 
tion is not exactly accurate. There are great differences, espe- 
cially in extensive states, between the characters of the inhabitants 
of different portions of the same territory. These diversities render 
it sometimes necessary to modify the conclusions that follow from 
considering the average character of the members of the same 
community as perfectly similar. Thus, the different characters 
of the inhabitants of England, Ireland, and Scotland, affect some- 
what deductions in this subject, drawn from treating the characters 
of the population of different parts of Britain as uniform. In 
truth, every large, society might be divided into several smaller 
societies, differing somewhat from each other. If they differ in 
some particulars, however, they agree in many more, and certain- 
results follow from this agreement, which make it convenient to 
treat of them as one. If necessary too, the amount of the inaccu- 
racy, arising from the assumption of a more perfect uniformity 
than exists, may be ascertained. 

2. Man, as an organic being, is governed by laws similar to 
those which other organic beings obey. Our subject obliges us 
to advert to a consequence arising from one of them. 

In the midst of the numerous revolutions and accidents to which 
the surface of the globe is subject, it is always abundantly re- 
plepished with animal and vegetable life, and the numbers of 
every race upon it are kept up to the quantity of materials fit for 
their subsistance which it affords them. The increase and de- 
crease of the human species, follows the general law. This 
seems to be the foundation of what has been termed the doctrine 
of population. In the subsequent pages it is received, simply as 
a statement of the fact, that the numbers of every society increase, 
as what its members are inclined to esteem a sufficient subsistence, 
is provided for them. 

The great majority of the members of every community, pro- 
cure their subsistence by labor, and, according to this principle, 
the number of laborers in every community must finally depend 
on the amount of those things esteemed by them sufficient for 


THE INSTITUTION OF SOCIETY. 


97 


their subsistence, which is annually distributed among them. It 
has been supposed, however, that there is a constant oscillation 
above and below this limit, and that sometimes therefore the sup- 
ply having to be divided among a greater number, the amount 
that each receives is less, sometimes, having to be divided among 
a smaller number, is greater, and thus that the wages of labor, 
though they always tend towards a fixed standard, never remain 
at it. Admitting that this continual vibration may take place, I 
conceive I may be permitted nevertheless to disregard it, and to 
assume that the remuneration awarded the laborer, is, in the same 
society, always a fixed quantity. As it is not intended to enter 
into any investigation of the principles determining the amount of 
the wages of labor in all societies, and at all times, nor to discuss 
the somewhat contradictory doctrines that have been maintained 
on this subject, the most simple assumption, and that, the errors 
arising from which may be supposed to balance each other, seems 
the best. 

* Even considering the subject however under the most simple 
conditions possible, there are still some difficulties attending it. 
The articles which the laborer uses, for food, clothing, &c., 
and which constitute his real wages, are continually varying. 
Thus, among the working classes in Great Britain, fabrics of 
cotton have, in a great measure, taken the place of those of linen, 
and wool for clothing ; as coal has taken the place of wood for fuel. 
Seeing there is this change in what constitute the wages of labor, 
how then, it may be demanded, can wages at any two times be 
considered equal ? 

In answer to such a question, it may be observed in general, 
that all articles supplying the wants of the laborer, and forming 
his real wages, are fitted for this purpose by some physical qual- 
ities they possess, producing certain effects on his bodily organs, 
and, through them, occasionally, on the perceptions and thoughts 
of his mind. One article, therefore, may be esteemed equal to 
another and different article, if the effects produced by both are 
equal. Thus a certain quantity of coal, may be considered equal 
to another of wood, if each gives out the same degree of heat. 
In many cases it is indeed very difficult to make this comparison 
with accuracy. This however is not absolutely necessary for 
our purpose, it being sufficient to conceive, that, what are termed 
the wages of labor, in the same society, at different periods, 
13 


98 


CIRCUMSTANCES ARISING FROM 


are really equal quantities, whether we have, or have not, the 
means of measuring them, and ascertaining that they actually 
are so. This may evidently be assumed, if we suppose that the 
laborer is equally well nourished, clothed, lodged, and instructed, 
and has equal leisure, at the one period and at the other ; whether 
he be fed, clothed, and lodged, in the same way or not. 

As the vigor of mind and body, as well as the skill, of different 
individuals in the same society, are unequal, the rate of the 
wages of labor, even in the same society, is far from uniform. 
It is however difficult and in general reasonings unnecessary, 
continually to refer to this variety ; and as it has, in consequence, 
been usually neglected, we shall not farther advert to it. 

According to the preceding assumptions, labor, in the same 
society, is to be considered as an invariable quantity, and a day’s 
labor as the unit, serving as the base for calculations, concerning 
the formation and exhaustion of the capacity of instruments. 
It is to be observed, however, that when so employed, it finally 
refers, not to the mental and corporeal effort exerted throughout 
the day by the laborer, but to the wages received by him. The 
laborer is, usually, merely the agent of some other person, and 
that other person is, in reality, the one forming the instrument 
constructed, as the wages of the laborers employed by him are 
the causes of its being constructed. In cases too, where the laborer 
works for himself, he rates his daily labor equal to a certain 
amount of some of the things he is in the habit of consuming, and 
this amount may be considered, as what he really gives to the 
construction of the instrument, in the formation of which he em- 
ploys himself. 

The rates of wages vary, very much, in different societies. A 
Chinese laborer, for example, subsists on very much less than an 
English laborer. On the principles of calculation which we have 
adopted, there is, therefore, a difference, in the quantity embraced 
by a day’s labor in one country and in another, and we cannot 
immediately compare, by this means, instruments formed in one 
society, with those formed in another. Our system has, in this 
respect, an analogy to the different systems of numeration, with 
regard to weights, measures, and coins, adopted in different 
countries. It will, as we proceed, appear, that this diversity in the 
rate of wages, in different communities, has also other and more 
important effects. 


THE INSTITUTION OF SOCIETY. 


99 


3. Every society possesses a certain amount of materials capa- 
ble of being converted into instruments. The surface of its ter- 
ritory, the various minerals lying below the surface, its natural 
forests, its waters, the command it may have of the ocean, and 
its consequent property in the minerals and animals contained in 
it, the rain that waters its soil, the elementary principles that may 
be extracted from the atmosphere, even, perhaps, the light and 
heat of the sun, are all to be regarded as materials, which, through 
the agency of the labor of its members, may be converted into 
instruments. The extent of the power, which the inhabitants of 
any state may possess, to convert into instruments the materials 
of which they have the command is however variable ; and in- 
creases, as we have seen, as their knowledge of the properties, of 
these materials and of the events, which in consequence of them, 
they are capable of bringing to pass, increases. Thus the large 
extent of the knowledge of the civilized man, compared with that 
of the savage or barbarian, gives him the power of constructing 
a much greater number of instruments out of the same materials, 
and enables the European emigrant to convert the soil and forests 
of America or New Holland, into means of producing a great 
mass of desirable events, which it was beyond the capacity of the 
ignorant native to effect. 


CHAPTER IV. 


EVERY INSTRUMENT MAY BE ARRANGED IN SOME PART OF A SERIES, OF 
WHICH THE ORDERS ARE DETERMINED, BY THE PROPORTIONS EXISTING 
BETWEEN THE LABOR EXPENDED IN THE FORMATION OF INSTRUMENTS, 
THE CAPACITY GIVEN TO THEM, AND THE TIME ELAPSING FROM THE 
PERIOD OF FORMATION TO THAT OF EXHAUSTION. 

As by the capacity of instruments is to be understood tbeir 
power to produce, or bring to an issue, events equivalent to a 
certain amount of labor, and as they are also formed by labor, it 
is evident that the capacity given to any of them, and the labor 
expended in its formation, have determinable numerical relations 
to each other. The length of time likewise, elapsing between 
their formation and exhaustion, may be expressed in numbers. 
If a series then were devised, of such a nature, that any relation 
that can exist among these three quantities, in consequence of 
their varying proportions to each other, might be embraced in it, 
every possible instrument would find a place there. 

It is to be observed that, in consequence of a principle soon to 
be explained, no instruments will be designedly formed, but such 
as have a greater capacity, or issue in events, equivalent to more 
than the labor expended in their construction. This circumstance 
renders the formation of such a series more easy, as it renders it 
unnecessary to take account, of any other instruments than such 
as issue in events equivalent to more than the labor expended in 
their formation, or, what may be termed, the cost of their forma- 
tion. To simplify the consideration of the matter, we may, for 
a little, proceed on the supposition, that every instrument is con- 
structed at one precise point of time, and exhausted at another. 
In that case, every instrument would find a place, in some part of 
a series, of which the orders were determined by the period of 
time at which instruments placed in them, issue, or would issue, 
if not before exhausted, in events equivalent to double the labor 


OF THE NATURE OF STOCK. 


101 


expended in forming them. These orders may be represented 
by the letters A, B, C, * # Z a, b, c, fyc. The relation to each 
other of the cost of formation, the capacity, and the time elapsing 
between the period of formation and that of exhaustion, of in- 
struments in the order A, is such as may be expressed by saying, 
they in one year issue in events equivalent to double the labor 
expended on their formation, or would so issue, if not before ex- 
hausted. The relation between these, in instruments of the order 
B, is such, that in two years they issue in events equivalent to 
double the labor expended on them, and are then exhausted. 
Instruments in the order C, in three years issue in events equiva- 
lent to double the cost of formation ; of the order D, in four years ; 
of the order Z, in twenty-six years ; of the order a. in twenty- 
seven years, &c. For the sake of facility of expression, instru- 
ments in the order A, or in the orders near it, will be said to be- 
long to the more quickly returning orders ; instruments in the order 
Z, or in the orders near it, or beyond it, will be said to belong to 
the more slowly returning orders. 

To imagine, in the first place, as simple a case as possible. 
An individual, say an Indian trader, is obliged to reside on 
a particular spot in the interior of North America, for somewhat 
more than a year. He arrives in autumn, and immediately sets 
about inclosing and digging up a piece of ground, for the purpose 
of having it planted with maize. He expends on this twenty days’ 
labor. That labor he reckons equivalent to ten bushels of maize. 
He gets the maize planted, hoed and harvested next season, by 
Indian women, agreeing to give them part of the crop. After 
deducting their portion he has twenty bushels for himself, with 
which he- leaves the place. The field he formed was then an 
instrument of the order A. The same individual has to reside a 
little more than two years in another quarter of the interior. He 
clears, or has cleared on his arrival, another piece of ground, and 
also expends on this operation twenty days’ labor. Owing how- 
ever to the soil being overrun with small roots, and it being neces- 
sary to wait till they partially rot before a crop can be put on it, 
he is aware that it cannot be planted until the second year. It is 
then planted as before, and, as it happens, with the same event as 
in the former field, yielding him net twenty bushels maize. This 
field then was an instrument of the order B. In the same way 
it is possible to conceive the formation and exhaustion of other 


102 


OF THE NATURE OF STOCK. 


instruments of this sort, answering to the orders C, D, E, & c. 
the capacity of them all being double the cost of formation, and 
the times intervening between the periods of formation and ex- 
haustion, being respectively three, four, five, &lc. years. Al- 
though, however, instruments exactly corresponding to the con- 
ditions assumed, may occasionally exist, and although it is pos- 
sible at least to conceive their existence throughout a lengthened 
series, yet, in fact, they seldom do exist so as exactly to answer 
the suppositions. In by far the greater number of instances, 
neither the times, elapsing between the periods of formation and 
exhaustion, are any exact number of years, nor are the capacities 
double the cost of formation. But, in all variations of these three 
quantities from an exact correspondence with any of the orders, 
the proportions existing between them, will, nevertheless, always 
be such, as to make it possible to reduce the instruments in which 
they occur, to some order or another in our series, or to an order 
that may be interposed between two proximate orders. 

Such variations may be reduced to three sorts. The first con- 
sists of instances where the capacity is double the cost of produc- 
tion, but the time, no exact number of years. In this case, the 
instrument does not exactly belong to any of the enumerated 
orders, but falls between two proximate orders ; it may therefore 
be said to belong to an order, that may be supposed to be inter- 
posed between these two. Thus, an instrument being exhausted 
in between seven and eight years, and having a capacity equal to 
double the cost of production, might be said to belong to an order 
lying between G and H. This designation would mark its char- 
acter with sufficient accuracy for our purpose. 

There are only two other cases. The capacity of the instru- 
ment may be exhausted before it arrive at an amount equal to 
double the cost of formation, or, it may not be exhausted until it 
has come to an amount greater than double the cost of formation. 
In the former case it is necessary to suppose the period of ex- 
haustion prolonged, the excess of the capacity of the instrument 
over the cost of formation increasing at the same ratio, until the 
capacity double the cost. It will then be shown to belong to 
some particular order, or to lie between two proximate orders. 
Thus, let an individual have it in his power to make use of a small 
plot of ground for six months, and let him expend an equivalent 
to two days’ labor in preparing it for receiving the seeds of some 


OF THE NATURE OF STOCK. 


103 


plant, sowing them, and cultivating the crop, and let it return 
him, at the end of six months, an amount, which, reduced to the 
value of days labor, would be 2,828. If then we suppose the 
period of exhaustion prolonged, the excess of the capacity over 
the cost increasing at the same ratio,, in twelve months time the 
capacity will be 4 ; for, 2,828 is a mean proportional between 2 
and 4. The instrument formed by the plants so cultivated, would 
therefore belong to the order A, that order doubling in one year. 

In the case where the capacity comes to more than double 
the cost of formation, the order in which the instrument should be 
placed, is to be found, by retracing the progress of its capacity, 
under the supposition that it advanced at the same rate, until we 
arrive at a period when it was only double the cost. The 
interval between that and the period of formation, will then 
indicate the order to which it really belongs. 

The bread fruit tree is perhaps twenty years before it bear ; 
but ten of these trees, when in bearing, will, it is said, nearly 
supply a family of South Sea islanders, with a sufficiency of this 
sort of food for eight months in the year. This sort of fruit tree 
requires, too, no other labor or attention than that bestowed in 
planting it. Suppose, then, that an inhabitant of one of those 
islands were to spend an hour in planting a few of these trees, 
and that, according to the hypothesis of sudden exhaustion, on 
which we are proceeding, at the termination of the twenty-two 
years they are exhausted, yielding at that period an equivalent 
to two thousand and forty-eight hours labor. If then we 
retrace the progress, at which the capacity of this instrument 
has advanced, w T e will find that it belongs to the order B. 
For, instruments in that order doubling in two years, one hour’s 
labor, if employed in forming an instrument of that order, 
ought to yield an equivalent to two hours, at the end of the 
second year; and being then employed in constructing other 
instruments, at the end of the fourth year should yield an 
equivalent to four hours, at the end of the sixth to eight, 
and so the geometrical series, 2, 4, 8, 16, he. would arise, 
which, carried out to the eleventh term, at the end of the twenty- 
second year, is 2048. It may perhaps serve somewhat to illus- 
trate the matter, to suppose, that the individual who applied 
an hour’s labor to planting the bread fruit tree, gave the same 
portion of time to the cultivation of another sort of plant, yielding 


104 


OF THE NATURE OF STOCK 


its produce, and perishing, at the termination of the second year 
from the time of its being placed in the soil, and the returns made, 
from which are equal to double the labor expended on its 
culture. Instead of consuming the crop at the termination 
of the second year, he gives it to some other person or persons, 
on condition of their applying for his benefit two hours’ labor, 
its equivalent, to the culture of a second crop ; at the end of 
the fourth year, he proceeds in the same manner, and, con- 
tinuing the process, at the termination of the twenty-second 
year, the produce of the labor, of both hours’, the one applied to 
the cultivation of the former plant, and the other, to that of the lat- 
ter, would be equal. The only difference in the cases would 
be, that, the person in question, would, in the latter case, have 
the trouble of making a bargain with one or more individuals every 
second year, and would then also have the power to apply, if he 
so chose, to the supply of his wants, the events, in this instance 
brought about by his previous expenditure ; and that, in the latter 
case, he would have neither the power nor the trouble. 

We have assumed, that all instruments are formed at one point 
of time, and exhausted at another. This is the case with but 
very few. The period of formation almost always spreads over 
a large space of time, and that of exhaustion, over another. It 
is evidently, however, possible to fix on a point, to be determined 
by a consideration of all the periods at which the labor going to 
the formation was expended, which shall represent the true 
period of formation ; and on another point, determined from a 
consideration of similar circumstances regarding the times when 
the capacity was exhausted, which shall represent the true period 
of exhaustion. 

Thus, suppose a small field in some new settlement in North 
America, were formed by twelve days labor, it would, were it of 
the order A, return in one year an equivalent to twenty-four days 
labor, and then be completely exhausted and worthless. It 
might, however, be, that it belonged to this order, although it 
neither yielded so much as twenty-four days labor, nor was ex- 
hausted at the end of the year. Say, that the crop sown is wheat, 
and, that one bushel wheat is equivalent to one day’s labor. 
Were it at once exhausted, it ought to yield twenty four bushels 
wheat; it however only yields eighteen, and is not then exhausted. 
There is consequently a deficiency of six bushels. Now, six 


OF THE NATURE OF STOCK. 


105 


bushels at the end of the second year, at the same rate of doubling 
in a year, ought to produce twelve. Let us suppose that the 
next crop is hay, and that the net hay yielded the second year 
is one ton, equal to eight bushels wheat, then 12 — 8 = 4, there 
is still a deficiency of four bushels, equivalent, at the end of the 
third year, to eight. If, therefore, the next crop of hay the third 
year, be equal to what it was the second, that is to eight bushels 
wheat, the deficiency will then be made up. Let us suppose 
that it is so, and that the field is at that time totally exhausted 
and useless. It is evident, that such a field, though not producing, 
or being exhausted as by the supposition, yet producing and 
being exhausted, in a manner equivalent to the supposition, might, 
with propriety, be said to belong to the order A. 

But, it is farther probable, that such a field, might not pro- 
duce quite so much grain, or hay, as w*e have even by the last 
hypothesis supposed, and would not even at the end of the third 
year, or for a much longer period, be exhausted ; still, if the 
deficiency in the one, w T ere equivalent to the farther supply in 
the other, it would evidently properly belong also to the same 
order. 

Again, by the suppositions we have made, the labor, or its 
equivalent, was expended exactly at the commencement of the 
period of one year. It might however have been, that some 
part of the expenditure, going to the formation of this instrument, 
was made several months before the commencement of the year, 
and some several months after. But, had what was expended 
before, been proportionably less, and what was expended after, 
proportionably greater, the change would not make any alteration 
to the relation existing between the time and the expenditure, 
or, consequently, to the place of the instrument. 

The spaces over which the several points of time, at which 
the formation of any instrument is effected, extend, and those 
/ over which the several points of time at which its capacity is 
exhausted also extend, frequently run into each other. Thus 
according to our system a riding-horse is an instrument. The 
space of time over which the whole period of his formation 
extends, commences when his dam is put apart for breeding, con- 
tinues as long as any thing is laid out for the purpose of giving 
efficiency and durability to him as an instrument, and probably 
therefore only terminates a few days before the death of the 
14 


106 


OF THE NATURE OF STOCK. 


animal. There would be a number of points all along that space, 
at each of which something had been expended on his account, 
and from the date of which, and the amount expended at each, 
data would be furnished, to ascertain the whole expense of his 
formation, and the precise point from whence it might be dated. 
The whole period of his exhaustion would also extend over a 
large space. It would commence when he was first ridden for 
pleasure, or business, and would terminate shortly after his death, 
when his hide went to the tanner, and his flesh to the dogs. 
An account of the several items expended, and the times when 
they were expended, and of the several items yielded, and the 
times at which they were yielded, would furnish data for determin- 
ing the total cost of formation and capacity and the points to be 
fixed on as the periods of formation and exhaustion, and thus the 
place of the instrument could be determined. 

Calculations of this sort would be intricate, and could not be 
well effected without having recourse to methods, not usually em- 
ployed in investigations like the present. In point of fact, there 
is in practice, as we will afterwards see, a system of notation of 
instruments, which enables us pretty accurately, and very easily 
to determine their place in such a series as we have supposed. 
It is sufficient for the end here aimed at, to perceive that when 
all particulars are known, concerning the formation and exhaustion 
of any instrument, and the periods intervening between these, 
data are then furnished for placing it in some part of such a series 
as we have described ; and that it may consequently be assumed 
that every instrument does, in reality, belong to some one order 
in the series A, B, C, D, &c., or to an order that may be inter- 
posed between some two proximate orders of that series. 

It may perhaps appear, that though, could instruments be con- 
sidered apart, the foregoing explications might serve to show, 
that they might all be reduced to a place in our series, yet, as 
they very commonly act in combination, and as, in such instances, 
the events in which two or more of them issue are the same, it 
must be impossible to fix with accuracy the order to which each 
belongs. Thus, a horse and a cart form together an instrument 
for the transport of goods. The events, therefore, in which both 
issue, being the same, we cannot measure the part that may be- 
long to each, in any other manner, than by appropriating to each 
the proportion indicated by their respective costs of formation, and 
hence they will both appear to belong to the same order, though 


OF THE NATURE OF STOCK. 


107 


perhaps they do in fact belong to different orders. But our subse- 
quent inquiries will show, that the great mass of the instruments 
existing in the same society are, in reality, at about the same 
orders ; and, that instruments acting in combination with other 
instruments, are almost always at the same orders. This objec- 
tion is therefore removed, as all instruments acting in combination 
may thus be considered as one. 

Instruments are frequently repaired. The labor or its equiva- 
lent, so expended, may be considered, either as a partial reforma- 
tion of the old instrument, or as the addition of a new instrument 
to be combined in action with the old one. The same rules 
therefore, apply to repairs effected on instruments, as to their 
original formation. 

We have assumed, hitherto, that both formation and exhaustion 
are properties common to 'all instruments. There is however a 
class of instruments, that forms an exception to this general rule. 
An extensive and important class exists, of a nature so peculiar, 
that the instruments belonging to it are never exhausted, unless 
in consequence of some revolution in the circumstances of the 
society. That part of the surface of the earth devoted to agricul- 
tural purposes composes this class. The peculiarity arises from 
every portion of land so employed, forming two distinct instru- 
ments. A piece of land, that it may do its part in providing a 
supply for future wants, must first be rendered capable of culture, 
and then be cultivated. It is not necessary that he who renders 
it fit for culture, should also cultivate it, though it commonly 
happens that both operations are performed by the same indi- 
vidual. But by whomsoever the operation of converting waste 
land, into land bearing crops, be performed, two ends are always 
gained by it, the power of cultivation, and the actual culture. 
There is this great difference between them, that while the 
changes produced in a piece of land to fit it for cultivation are 
lasting, remaining unless some means be taken to do away with 
them ; those that are effected on it by the actual process of culti- 
vation are of short, or at all events, of limited duration. When 
an individual has converted a portion of morass or forest, into a 
field fit for the operations of tillage, it does not return again to 
the state of morass or forest. He has fitted it for being made an 
instrument of agriculture, or rather a succession of instruments of 
agriculture. The farmer, by manuring it, sowing certain seeds 
in it, and tilling it, forms it into such an instrument. The changes 


108 


OF THE NATURE OF STOCK. 


he thus effects however pass away. The seeds he sows, grow- 
ing into plants of different kinds, are carried off ; the manure 
yields part of its substance to them, and is in part dissipated ; the 
soil that had been loosened and pulverized by the plough and 
harrow, is gradually again compacted and hardened, by the effects 
of the action of the sun and rain. As far then as it was actually 
an instrument of agriculture it is exhausted. But its power of 
being again formed into such an instrument remains, and the same 
operations, the same rotation of crops, may indefinitely succeed 
one another. 

The individual who first forms a portion of land into these 
combined instruments, has probably in view, only the ends to be 
gained by one of them. His motive to expend labor on the for- 
mation of the field, is to fit it for immediate culture. But, he 
cannot effect this, without also rendering it capable of being cul- 
tivated to all succeeding times. The returns, which for this 
reason it makes in those succeeding times, form what is called 
rent ; and this peculiarity in the nature of this sort of double in- 
strument, is one of the chief causes of the existence of that par- 
ticular species of revenue. Any portion of land therefore, which 
bears a crop, considered as regards its fitness for being cultivated, 
is an instrument of indefinite exhaustion, and will not conse- 
quently coincide with the conditions by which the orders in our 
series are determined. We shall afterwards see, that in every 
instance it may, notwithstanding, be reduced to a determined 
place in that series. A portion of cultivated land, considered as 
an instrument actually subject to the operations of the husband- 
man, does not differ from any other instrument. 

In conclusion, it may be observed that the position in our 
series which any instrument will occupy, is determined by the 
following circumstances. 

1. The shorter the space of time between the period of its 
formation, and that of its exhaustion, the nearer will any instru- 
ment be placed to the order A, that is, towards the more quickly 
returning orders. 

2. The greater the capacity, and the less the cost of its form- 
ation, the nearer will any instrument be to the order A ; the 
less the capacity, the greater the cost of formation, the farther 
will it be from A. 

Generally, the proximity of instruments to A is inversely as the 
cost and the time, and directly as the capacity. 


CHAPTER V. 


CIRCUMSTANCES DETERMINING THE AMOUNT OF INSTRUMENTS FORMED. 

Having traced the general nature of instruments, and shown, 
that the relations existing among the circumstances by which 
they are affected, make it practicable to arrange them in a reg- 
ular series, the object next claiming our attention, is, to ascertain 
the causes determining the amount of them which each society 
possesses, and to mark the more remarkable phenomena which 
the operation of those causes produces. 

The causes determining the amount of instruments, formed by 
any society, will, I believe, be found to be four. 

1. The quantity and quality of the materials owned by it. 

2. The strength of the effective desire of accumulation. 

3. The rate of wages. 

4. The progress of the inventive faculty. 

The nature of the second of these, and the circumstances on 
which its strength depends, will form the subject of the next 
chapter, but previously to entering on it, it is necessary to estab- 
lish the following proposition. 

The capacity which any people can communicate to the mate- 
rials they possess, by forming them into instruments, cannot be 
indefinitely increased, while their knowledge of their powers and 
qualities remains stationary, without moving the instruments 
formed continually onwards in the series ABC fyc. : but, there 
is no assignable limit to the extent of the capacity, which a peo- 
ple having attained considerable knowledge of the qualities and 
powers of the materials they possess, can communicate to them, 
without carrying them out of the series ABC fyc., even if 
that knowledge remain stationary. 

The capacity of instruments may be increased, by adding to 


110 


OF THE NATURE OF STOCK. 


their durability, or to their efficiency ; that is, by prolonging the 
time during which they bring to pass the events, for the purpose 
of effecting which, they are formed, or, by increasing the amount 
of them which they bring to pass within the same time. 

A dwelling-house is an instrument, aiding to bring to an issue 
events of various classes. It more or less completely prevents 
rain, damp, and the extremes of cold and heat, from penetrating 
to the space included within its area. It preserves all other 
instruments contained within it, in comparative safety. It gives 
those who inhabit it the power of carrying on unmolested, various 
domestic occupations, and of enjoying, undisturbed by the gaze 
of strangers, any of the gratifications or amusements of life, of 
which they may be able and desirous to partake. Events of 
these sorts, it may bring to pass, for a longer or shorter time, or 
to a greater or less extent, within the same time. In the former 
case, the durability is increased, in the latter, the efficiency ; in 
both, the capacity is augmented. Dwelling-houses are built of 
different materials, and those materials are wrought up with more 
or less care. A dwelling might be slightly run up of wood, 
lath, mud, plaster, and paper, which would only be habitable for 
a few months or years, like the unsubstantial villages, that Cathe- 
rine of Russia saw in her progress through some parts of her do- 
minions. Another of the same size, accommodation, and appear- 
ance, that might last for two or three centuries, might be con- 
structed, by employing stone, iron, and the most durable woods, 
and joining and compacting them together, with great nicety and 
accuracy. Between these two extremes there are all imaginable 
varieties. According to that adopted, both the durability and the 
efficiency will be greater or less. These two may be separated 
from each other, at least in imagination, and therefore we may 
consider them apart. 

If the increased durability that may be given an instrument be 
considered apart from the increased efficiency that will also proba- 
bly be communicated to it, it must be regarded simply as an 
extension of its existence, and consequently as a like extension of 
its capacity. A dwelling-house lasts, we shall say, sixty years, but 
in other respects is perfectly similar to one lasting only thirty 
years. Considered as an instrument, the former is, therefore, 
exactly equal to two of the latter, the one formed thirty years 
after the other. A house lasting one hundred and twenty years 


OF THE NATURE OF STOCK. 


Ill 


would in like manner have the capacity of four houses, one 
formed now, a second thirty, a third sixty, and a fourth ninety 
years hence. The capacity thus increasing at the same rate as 
the duration, if the limits to the power of giving durability be 
indefinite, the limits to the power of communicating capacity are 
also indefinite. 

But to give additional durability to the instrument there must 
be additional labor bestowed on its formation. An increase of 
the durability of an instrument may therefore be considered as 
a power communicated to it of giving existence to a new instru- 
ment at the end of a certain period, and purchased by a present 
expenditure. The effects produced by the change will be de- 
termined by the relations subsisting between the returns made by 
the addition, its cost, and the time elapsing between the ex- 
penditure and return. If we suppose the present expenditure 
necessary to produce the durability, to be always equal to the 
durability produced, then the compound instrument will be moved 
towards the more slowly returning orders, because the new in- 
strument is in that case one of slower return. One dwelling-house 
lasts thirty years ; another, the same as it in other respects, but 
costing double the expense of formation, lasts sixty years ; the 
former house is an instrument of the order O, doubling in fifteen 
years. The part of the duration of the latter extending from 
the thirtieth to the sixtieth year, is to be considered, by our 
hypothesis, as a separate instrument. If we suppose, that dur- 
ing the time it is in use it returns as the other, at the end of the 
sixtieth year it will have returned only four, and, therefore, is an 
instrument of the order C doubling only in thirty years. The 
compound instrument will, in consequence, be of an order be- 
tween X and Y, doubling in between twenty-four and twenty- 
five years. The procedure of adding to the durability, by 
adding equally to the expense of formation, will have greater 
effect in placing an instrument further from A, the more it is 
subjected to its operation. Thus, were an instrument of this sort 
to have its duration prolonged to one hundred and twenty years, 
and at the same expense, the last thirty would return only four 
in one hundred and twenty years, whereas, had it formed an 
instrument of the order O, it ought to have yielded two hundred 
and fifty-six. Were the durability increased still farther, at the 
same cost, the divergence would be much greater, going on in a 


112 


OF THE NATURE OF STOCK. 


geometrical ratio. If, therefore, continual additions be made to 
the durability of an instrument, it cannot be preserved at an 
order of equally quick return, unless the several augmentations 
be communicated to it, by an expenditure diminishing in a geo- 
metrical ratio ; that is, in a ratio becoming indefinitely less, as 
it is continued. This, however, cannot happen, for, it would 
imply an absurdity. While instruments are in existence, they 
are either producing events, or giving a new direction to their 
course. But, mere matter, unless in some very rare instances, 
is never acting, or acted upon, without undergoing a change. 
This we term wear, and the effects it indicates form consequently 
a definite power, to counteract which, a definite force must be 
found. It cannot then, be counteracted, by a force indefinitely 
small. 

The same thing may be illustrated in another manner. When 
events are produced -and governed by design, they in turn gen- 
erate other events of greater powers than themselves, and these 
others, in a series rapidly increasing. Mere durability in instru- 
ments, may be considered as a capacity to generate future events, 
lying dormant in them, till the lapse of years exposes its exist- 
ence, and gives it opportunity to act. The greater the* time 
therefore, for the expiration of which it must wait, the less the 
chance of its being on an equality with rivals, whose powers are 
continually and rapidly multiplying either events, or enjoyments, 
whenever they have a field on which to exert their energies. 

While the knowledge of the course of events which the mem- 
bers of any society possess remains unaltered, and the materials 
they own are the same, the duration of the instruments they 
form cannot, consequently, be indefinitely increased, without their 
being moved, farther and farther, from the more quickly return- 
ing orders. 

The durability of instruments refers only to those of gradual 
exhaustion ; their efficiency, or the extent of their power to bring 
about events within a certain time, refers both to those of gradual, 
and of sudden exhaustion. If the knowledge of the course of 
events, and the amount of the materials remain the same, the 
efficiency of these materials when formed into instruments cannot 
be indefinitely increased, without that increase being at length 
made with additional difficulty, and through means of an amount 
of labor greater than was required in the earlier stages. The 


OF TPIE NATURE OF STOCK. 


113 


action of matter upon matter always depends on some cause. 
Those causes, — the inherent qualities and powers of the different 
matters around him, — are the means man employs to make one 
material to act so on another as to produce the events he 
desires, and he does so by applying his labor to give them 
such a form and position as may bring their powers into 
play. If we suppose any number of men to be fixed to one 
situation., and their knowledge of the qualities of the materials 
around them to remain stationary, they will naturally first make 
choice of those materials, w T hose powers .are most easily brought 
into action, and which produce the desired events most abundantly 
and speedily. But as the stock of materials which any society 
possesses, is limited, its members, if we suppose them to acquire 
no additional knowledge of the powers of those materials, and 
yet to add continually to the amount of instruments they form 
out of them, must at length have recourse to such as are either 
operated on with greater difficulty, or bring about desired events 
more sparingly or tardily. The efficiency of the instruments 
produced must therefore be generated by greater cost ; that is, 
they must pass to orders of slower return. 

This passage will be rapid, or slow, as the amount of know- 
ledge possessed is small, or great. When art is in its infancy, 
and men know but a few of the properties fitting them for be- 
coming instruments, that are inherent in the materials in their 
possession, they cannot much vary their mode of proceeding on 
them, by combining, and giving new turns to their actions on each 
other. In more advanced stages of society, on the contrary, where 
the powers of a great number of materials are known, and where 
consequently their operations on each other, may be combined, 
and multiplied to a great extent, the means by which the same 
end may be attained are very numerous. Some of them are 
more easy or expeditious than others, but they differ by very 
slight degrees, and the instruments formed by successively adopt- 
ing them, would occupy positions in one series not widely distant 
from one another. 

Jf we then consider the capacity that may be given any amount 
of materials, by a society among whom the progress of art is 
stationary, as separated into the durability, and efficiency, of the 
instruments its members form, it would appear, that they are 
both subject to similar laws, and that neither can be indefinitely 
15 


114 


OF THE NATURE OF STOCK. 


increased, without carrying the instruments constructed contin- 
ually on, to orders of slower return. The same general conclu- 
sions must obviously hold good, concerning the capacity consid- 
ered as combined of both. There is, however, a circum- 
stance flowing from the consideration of this union, which is 
deserving of notice, as it has considerable effect in the relations 
between the cost and capacity of instruments, and, consequently, 
on the position to be assigned them. It often happens, that ad- 
ditional labor bestowed on an instrument, to give it greater 
efficiency, gives it also greater durability. Thus the same choice 
of materials, and the same careful and laborious formation of 
them, that render the walls of a dwelling-house effective in ex- 
cluding the inclemency of the weather, give it also solidity and 
strength, and consequently prolong its duration. A tool, in the 
fabrication of which good steel has been employed, not only cuts 
better, but lasts longer, than one formed of inferior stuff. In 
such cases, and they are very numerous, the capacity being in- 
creased, both as concerns durability and efficiency, by the same 
outlay, its proportion to the cost is greater and a larger expen- 
diture may be made on the formation of the instrument without 
moving it at all or moving it but a short distance towards the orders 
of slower return. Sometimes the same expenditure that gives 
efficiency to instruments, partly also increases their durability 
and partly, quickens their exhaustion. Thus, the majority of 
roads in North America, and in many other countries, are con- 
structed altogether of the soil of which the surface happens to 
consist, arranged in a form adapted to the purpose. Such roads, 
unless in the best of weather, are very inefficient instruments in 
facilitating transport, and their durability is so small, that they 
are probably reconstructed , by repair, every four or five years. A 
road formed of small fragments of stone, in the manner that is 
termed macadamization, costs perhaps twenty times as much, 
but is both a far more efficient, and a far more durable instru- 
ment. Besides however being more durable, and efficient, the 
facility it gives to transport occasions an increase of transport, and 
its exhaustion is thus quickened. For example, the capacity of 
a road of this sort, may be adequate to the- transport of two hun- 
dred thousand carriages ; if this be spread over twenty years, it 
will be an instrument of much slower return, than if, in conse- 
quence of the annual transport being doubled, that number pass 
over it in ten years. 


OF THE NATURE OF STOCK, 


115 


As efficiency and durability are frequently produced by the 
same means, so, it sometimes happens, that the means which 
would add to the one, cannot be employed, without diminishing 
the other. Thus there are many tools and utensils, that cannot 
be made very strong, and therefore durable, without being at the 
same time clumsy, and inefficient ; and they cannot be made very 
light, and easy to work with, without being also of little durability. 
The difficulty in the combination of the qualities of durability 
and efficiency, in the same materials, can only, however be con- 
sidered as absolutely limiting the capacity of those instruments, 
to support the weight of which, a corporeal exertion is required ; 
and is consequently confined to wearing apparel, and to those 
tools, and utensils, which are altogether moved by the hand. 
When the weight rests on some firm basis, it can be poised, 
and by the application of sufficient expenditure friction, can be 
removed. The circumstance of the qualities of durability, and 
efficiency, depending on the same materials, has therefore, pro- 
bably, on the whole, the effect of retarding somewhat, though 
not very greatly, the progress of instruments as greater capacity 
is given to them, towards the more slowly returning orders. 

The various powers of the material world, seem to be connected 
at some common centre, and its several parts to exercise reciprocal 
influences on each other. Hence, a discovery of new properties 
in any one material, or more easy modes of bringing the old into 
play, generally extends the power of man over a great range of 
the other materials, which he had been in the habit of before 
applying to his purposes. When art, therefore, has made con- 
siderable progress, and comprehends within its dominion a mul- 
tiplicity of materials, the variety of effects that may be generated, 
from the action, and reaction, on each other, of the numerous 
powers at its disposal, becomes illimitable. As in numbers, every 
addition multiplies amazingly the possible antecedent combina- 
tions, until at length the amount becomes too great to be ascer- 
tained. Hence it is, that, though among barbarous nations, the 
ability of man to increase the amount of instruments he possesses 
may be bounded, among nations having made considerable ad- 
vance in art, there seems no assigning any limit to it, other than 
that indicated in the second part of the proposition, the necessary 
gradual passage of the instruments constructed, to orders of 
slower and slower return. 


i 


116 


OF T1IE NATURE OF STOCK. 


It is hence, that, if we turn to any community where art has 
advanced, we invariably see, that however much industry may 
have already exerted itself, on the materials within its reach, the 
field for its possible future action seems rather increased than 
diminished, and that the farther we stretch our view over it, to 
the greater distance its extreme circumference recedes from us. 
The industry of the people of Great Britain, has probably been 
as largely applied to the materials which its limited territory 
possesses, as that of any other community presently existing ; yet 
certainly, there is no lack of matters on which it might be farther 
exercised. A large portion of its surface, and which wants not, 
nevertheless, all the requisites for the sustenance of vegetable 
life, lies yet uncultivated. With the exception of the mountain- 
ous and rocky regions, heat, light, air and water, in sufficient 
abundance rest on every part of it, nor is the presence of many 
of the earths, the mixture of which forms a proper shelter for the 
tender radicle fibres, and a commodious storehouse for an impor- 
tant part of their nourishment, any where wanting. There is 
also in general a considerable supply diflused over the surface, of 
the decomposing remains of former vegetables, and animals, the 
material which constitutes nearly the whole solid food, that the 
organic life of plants requires ; and, even when this is deficient 
at one point, there are larger collections of it at some other. 
The outlay requisite, in many instances, to give such form to 
these materials, as to fit them for the purposes of the agriculturist, 
would, no doubt, be very great, still, whatever it might be, as 
the instrument formed would be of unlimited duration, the annual 
returns from it, would, in time, exceed the cost of formation, 
and bring it within the limits of our series. 

Were we to go over the various other instruments, the returns 
from which supply the wants of this community, we should per- 
ceive, that every where, their capacities are capable of being 
greatly increased. One would not find it very easy to say, how 
much might be added, to the durability and efficiency, of dwel- 
ling-houses alone. The amount of the capacity for the facilita- 
tion of future transport, which might be embodied in railroads, 
returning ultimately much more than the cost of their formation, 
is incalculable ; as is also, the degree to which mining operations 
might be extended. Even supposing all these, and many other 
instruments, to have acquired a vastly increased extent, both as 


OF THE NATURE OF STOCK. 


117 


concerns durability and efficiency ; instead of limiting their far- 
ther increase, it would seem likely, rather to open up a still 
wider space, for the exertion of future industry in the formation 
of others. Were the soil universally cultivated, were railroads 
extended and ramified throughout the country, and were the 
riches of the mineral kingdom more fully brought out, the addi- 
tional facility given to the formation of instruments, by the com- 
mand afforded of the materials necessary for their construction, 
and the ease with which they might be transported from point to 
point, would, it may well be supposed, be sufficient, to give the 
means of a still greater increased construction of them, and a 
still farther advance, of the amount of the capacities for the sup- 
ply of futurity, embodied in the various instruments, spread over 
the surface of the territory, or lying above, or beneath it. In 
short, the more we consider the subject, the more clearly shall 
we perceive the impossibility of fixing any limit to the amount 
of the labor which may be expended in the formation of instru- 
ments, in this, or any other community, where art has made 
considerable advance. 

This progress, while art itself remained stationary, would, 
however, undoubtedly, gradually carry instruments to more and 
more slowly returning orders, and would not therefore take place, 
unless the society were inclined to construct instruments of those 
orders. What the circumstances are, which determine individ- 
uals, and societies, to stop at this, or that order of instruments, 
will form the subject of the next chapter. 


CHAPTER VI. 


OF THE CIRCUMSTANCES WHICH DETERMINE THE STRENGTH OF THE 
EFFECTIVE DESIRE OF ACCUMULATION. 

It has been shown, in the preceding chapter, that, in commu- 
nities where an extensive knowledge of the materials within 
reach of the industry of their members has generated numerous 
arts, we can assign no limit, in the nature of the materials them- 
selves, to the capacity for the supply of future wants that might 
be given to them : but, that the instruments so formed, pass, by 
a gradual and uninterrupted progress, to orders of slower and 
slower return. It is scarcely necessary to observe, that the in- 
crease to the capacity which may be given to instruments, can- 
not be restricted by inability to devote additional labor to their 
construction ; for, as all instruments at the period of their ex- 
haustion return more than the cost of their formation, they give 
the means of reconstructing others, returning also, somewhat 
more largely than themselves. There are, nevertheless, in 
every society causes, effectually bounding the advance of instru- 
ments to orders capable of embracing a larger and larger circle 
of materials, and the determination of those causes is the subject, 
now claiming our attention. 

Instruments are all formed by one amount of labor, or some 
equivalent to it, that is, by something either capable of yielding, 
or itself constituting some of the necessaries, conveniences, or 
amusements of life, and they return another greater amount of 
labor or its equivalents. The formation of every instrument 
therefore, implies the sacrifice of some smaller present good, for 
the production of some greater future good. If, then, the pro- 
duction of that future greater good, be conceived to deserve the 
sacrifice of this present smaller good, the instrument will be 
formed, if not, it will not be formed. According to the series in 


OF THE NATURE OF STOCK. 


119 


which we have arranged instruments, they double the cost of 
their formation in one, two, three, &q. years. Consequently, 
the order to which in any society the formation of instruments 
will advance, will be determined by the length of the period, to 
which the inclination of its members to yield up a present good, 
for the purpose of producing the double of it at the expiration of 
that period, will Extend, according as it stretches to one, two, 
three, twenty, forty, &c. years will the formation of instruments 
be carried, to the orders, A, B, C, T, n, he. and, at the point 
where the willingness to make the the sacrifice ceases, there the 
formation of instruments must stop. The circumstances there- 
fore, on such occasions governing the decision of the members of 
all societies, must be the causes, fixing the point, to which the 
formation of instruments may in any society be carried, and be- 
yond which it cannot advance. The determination to sacrifice 
a certain amount of present good, to obtain another greater 
amount of good, at some future period, may be termed the effect- 
ive desire of accumulation . All men may be said to have a 
desire of this sort, for all men prefer a greater to a less ; but to 
be effective it must prompt to action. 

Were life to endure for ever, were the capacity to enjoy in 
perfection all its goods, both mental and corporeal, to be prolonged 
with it, and were we guided solely by the dictates of reason, there 
could be no limit to the formation of means for future gratifica- 
tion, till our utmost wishes were supplied. A pleasure to be 
enjoyed, or a pain to be endured, fifty or a hundred years hence, 
would be considered deserving the same attention as if it were to 
befall us fifty or a hundred minutes hence, and the sacrifice of a 
smaller present good, for a greater future good, would be readily 
made, to whatever period that futurity might extend. But life, 
and the power to enjoy it, are the most uncertain of all things, 
and we are not guided altogether by reason. We know not the 
period when death may come upon us, but we know that it may 
come in a few days, and must come in a few years. Why then 
be providing goods that cannot be enjoyed until times, which, 
though not very remote, may never come to us, or until times still 
more remote, and which we are convinced we shall never see? 
If life, too, is of uncertain duration and the time that death comes 
between us and all our possessions unknown, the approaches of 


120 


OF THE NATURE OF STOCK. 


old age are at least certain, and are dulling, day by day, the 
relish of every pleasure. 

A mere reasonable regard to their own interest, would, there- 
fore, place the present very far above the future, in the estima- 
tion of most men. But, it is besides to be remarked, that such 
pleasures as may now be enjoyed, generally awaken a passion 
strongly prompting to the partaking of them. The actual pre- 
sence of the immediate object of desire in the mind, by exciting 
the attention, seems to rouse all the faculties, as it were, to fix 
their view on it, and leads them to a very lively conception of 
the enjoyments which it offers to their instant possession. The 
prospects of future good, which future years may hold out to us, 
seem at such a moment dull and dubious, and are apt to be 
slighted, for objects on which the day-light is falling strongly, 
and showing us in all their freshness just within our grasp. There 
is no man perhaps, to whom a good to be enjoyed to day, would 
not seem of very different importance, from one exactly similar 
to be enjoyed twelve years hence, even though the arrival of 
both were equally certain. 

Nor, while we retain any taste for pleasures, is it easy to pre- 
scribe limits to the extent in which we may indulge in them, or 
to the amount of the funds they may absorb. Every where we 
see, that, to spend is easy, to spare, hard. Every one indeed 
looks upon those in the rank immediately above him, as rolling 
in superfluous extravagance. But, in every rank, from the 
prince to the peasant, there are very many individuals, who have 
difficulty in procuring funds to defray the cost of articles, the ex- 
penditure of which they look upon as necessary to their condi- 
tion, and, for the remainder, in the different classes, who have 
more than their utmost real desires would call for, pleasure is so 
entwined with extravagance, in the forms in which she presents 
herself to each, that it is difficult fully to embrace the one, 
without coming within the circle of the other. 

It would then appear, that merely personal considerations, can 
never give great strength to the effective desire of accumulation. 
A future good, as concerns the individual, when balanced against 
a present good, is both exceedingly uncertain in its arrival, and 
in the amount of enjoyment it may yield, is probably far inferior. 
Such considerations would undoubtedly represent it, as a great 


OF THE NATURE OF STOCK. 


121 


folly to deny youth or manhood pleasure, that old age might 
have riches not to be enjoyed by it, but which, like the fabled 
monster in the garden of the Hesperides, it must employ itself 
with restless care to guard for others, 


“ Conservans aliis, quae periere sibi 

Sicut in auricomis pendentia plurimus hortis 

Pervigil observat non sua poma draco.”* 

A prudent calculation of mere personal enjoyment, could 
prompt to nothing more than a provision for self, and would only 
lead to the making, as it is said, the day and the journey alike, 
and taking care, that youth should not want pleasure, nor old 
age comfort. But, as passion is ever getting the better of mere 
prudence, this limit would every now and then be exceeded, and 
in numerous instances, the satiety of riot would be succeeded by 
the miseries of want. Wherever a large amount of means for 
the gratification of the present existed, they would be squandered, 
and no one, on the other hand, would be inclined to make any 
great sacrifice of the present, for the purpose of providing for 
the future. The strength of the effective desire of accumulation 
would be low, and only such instruments would be formed as 
were of the quickly returning orders. 

But man’s pleasures are not altogether selfish. He receives 
pleasure, from giving pleasure, and is far from the perfection of 
his existence when he does not draw his enjoyments, rather 
from the good he communicates, than from that which he re- 
serves. Without the ties which bind him to others through the 
conjugal and parental relations, the claims of his v kindred, his 
friends, his country, or his race, life would be to most men a 
burden. These are its great stimulants, and sweeteners, giving 
an aim to every possible exertion, and an interest to every mo- 
ment. If, sometimes, they shadow our being with cares and 
fears, those passing shadows but prove there is a sunshine. The 
light of life only disappears, and its dreary night then commen- 
ces, when we have none for whom to live. Then the whole 
creation is a void. Really to live is to live with, and through 

* C. C. Galli. Eleg. I. The whole elegy is illustrative of that isolation of 
feeling and action, and consequent individual misery, and general weakness, 
that pervaded the Empire at the time. 

16 


122 OF THE NATURE OF STOCK. 

others, more than in ourselves. To do so we must do so truly. 

“ Love, and love only, is the loan for love.” 

If the mere pretence deceive others, it mocks and tantalizes our- 
selves, encircling us with a joy as unreal, as that, which the looks 
and tones of affection shed round him, who receives them dis- 
guised in a borrowed garment. We cannot enjoy them, because 
we feel that they are not ours, but some other’s whose dress we 
w r ear. 

In so far as to procure good for others, gives a real pleasure 
to the individual, he is released from that narrow and imperfect 
sphere of action, to which his mere personal interests would con- 
fine him, and the future goods which the sacrifice of present ease 
or enjoyment may produce, lose the greater part of their uncer- 
tainty and worthlessness. Though life may pass from him, he 
reckons not that his toils, his cares, his privations, will be lost, if 
they serve as the means of enjoyment to some whom he may 
leave behind. These feelings, therefore, investing the concerns 
of futurity with a lively interest to the individual, and giving a 
continuity to the existence and projects of the race, must tend to 
strengthen very greatly the effective desire of accumulation. 
There would seem to be no limit to the possible extent of their 
operation. The more powerful and predominating they become, 
the greater must be their influence. It is true they are often 
feeble, and oppressed by other principles, and it is just as true 
that the world is full of deceit, hollowness, and unhappiness. As 
far as they exist, however, they form a real element, of great 
power in the determination of the course of human action, and 
one the nature of which would seem to indicate, and experience 
to prove, to be of great influence, on the particular part of it 
that forms our present subject. In the succeeding pages, the 
terms, the social and benevolent affections , will be employed to 
denote them. 

The strength of the intellectual powers, giving rise to reason- 
ing and reflective habits, forms another important element in the 
determination of the course of human action. These habits in 
opposition to the passions of the present hour, bring before us 
the future, both as concerns ourselves, and others, in its legitimate 
force, and urge the propriety of providing for it. Although 
therefore, were our cares limited altogether to ourselves, the 
greatest strength of the reasoning faculty, could prompt to but a 


OF THE NATURE OF STOCK. 


123 


very limited operation on the events of futurity, yet, the farther 
they extend to others, the wider is the circle of operations that 
it leads us to embrace. These two principles of our nature, the 
social and benevolent affections, and the intellectual powers, 
serve indeed mutually to move each other to action, the affections 
exciting the intellect to discover the means of producing good, 
the intellect opening up a channel to the affections by giving 
the power to do good. 

All circumstances increasing the probability of the provision 
we make for futurity being enjoyed by ourselves or others, also 
tend to give strength to the effective desire of accumulation. 
Thus a healthy climate, or occupation, by increasing the pro- 
bability of life, has a tendency to add to this desire. When 
engaged in safe occupations, and living in healthy countries, men 
are much more apt to be frugal, than in unhealthy, or hazardous 
occupations, and in climates pernicious to human life. Sailors 
and soldiers are prodigals. In the West Indies, New Orleans, 
the East Indies, the expenditure of the inhabitants is profuse. 
The same people, coming to reside in the healthy parts of Eu- 
rope, and not getting into the vortex of extravagant fashion, live 
economically. War, and pestilence, have always waste, and 
luxury, among the other evils that follow in their train. 

For similar reasons, whatever gives security to the affairs of 
the community, is favorable to the strength of this principle. 
In this respect the general prevalence of law and order, and the 
prospect of the continuance of peace and tranquillity, have con- 
siderable influence. 

These seem to be' the chief circumstances, determining the 
relations between present and future good, in the minds of 
those in any society, who have a mind and a will, at the time 
they are forming habits. When habits are once formed, they 
regulate the tenor of the future life, and make slaves of their 
former masters. There are, however, in every society, very 
many, who form habits, and pursue a certain line of conduct 
through life, not from any reasoning or choice of their own, 
but hurried on by the example of those around them, and the 
general direction in which the current of feeling and action sets 
throughout the whole body. It is evident, howevfer, that the 
power that moves and directs the mass, lies not in them, but in 
those, who govern their conduct in whole, or in part, by their 
own feelings and passions, and the reflections which the situation 


124 


OF THE NATURE OF STOCK. 


of circumstances around them suggest to them. These form the 
great moving principle, the others, like the balance-wheel in an 
engine, merely keep up, and give uniformity, to the motion they 
generate. 

The desire to accumulate would then seem to derive strength , 
chiefly from three circumstances. 

1. The prevalence throughout the society, of the social and 
benevolent affections, or, of that principle, which, under what- 
ever name it may be known, leads us to derive happiness, from 
the good we communicate to others. 

2. The extent of the intellectual powers, and the consequent 
prevalence of habits of reflection, and prudence, in the minds of 
the members of the society. 

3. The stability of the condition of the affairs of the society, 
and the reign of law and order throughout it. 

It is weakened, and strength given to the desire of immediate 
enjoyment, by three opposing circumstances. 

1. The deficiency of strength in the social and benevolent 
affections, and the prevalence of the opposite principle, a desire 
of mere selfish gratification. 

2. A deficiency in the intellectual powers, and the consequent 
want of habits of reflection and forethought. 

3. The instability of the affairs of the society, and the imper- 
fect diffusion of law and order throughout it. 

The reader may perhaps conceive, -that, in enumerating these 
different circumstances, and deducing the strength of the effect- 
ive desire of accumulation from the preponderance of the one 
class over the other, I am attempting an unnecessary refine- 
ment, and that the principle of a regard to self interest alone, 
though it may not, of itself, give great strength to this desire, yet, 
from its combination with other springs of action, must, generally 
do so indirectly and ultimately and may, therefore, be assumed as 
a cause sufficient to account for the phenomena. If we confine 
our attention to the present times, and to particular parts of the 
globe, this may be readily admitted. Now, and in those places, 
a prudent regard to self interest would doubtless prompt many 
individuals to cooperate effectively in the increase of the general 
means of enjoyment. But there is nothing more apt to mislead 
us, when investigating the causes determining the motions of any 
great system, than to take our station at some particular point in 


OF THE NATURE OF STOCK. 


125 


it, and, examining the appearances there presented to us, to sup- 
pose that they must be precisely similar through the whole sphere 
of action. Because, in Great Britain, a regard to mere self in- 
terest, may now prompt to a course of action leading to making 
a large provision for the wants of others, we are, in reality, no 
more warranted to conclude that it will do so always, and in every 
place, than were the ancients warranted to conclude, because, in 
their particular communities, the pursuit of wealth commonly 
generated evil, that it must therefore do so always and in every 
place. 

There seem to be, in modern times, and in particular com- 
munities, two circumstances, that may lead an individual, from a 
mere regard to his personal interest, to pursue the paths of sober 
industry and frugality, and, consequently, to make an extended 
provision for the wants of others. These seem to be the desire 
of personal, and family aggrandizement, and a wish, conjoined 
with the pursuit of both, to rank high in the estimation of the 
world. The acquisition of fortune, is a road open to the am- 
bition of all men, and, in the present days, is the only road open 
to that of most men. The mere desire to rise in the world, and 
envy of the superiority of other men, may excite many to enter 
on this path, and preserve them steadily in it. This sort of 
spirit, however, must be kept in strict check, by a large sur- 
rounding mass of genuine probity, and tenderness of the hap- 
piness of others, or it certainly breaks out into' disorders. There 
is none more easily tempted to evil, or more dangerous. It is 
the first to diminish the security of all compacts, and transactions 
of business, by fraud and exactions ; it is the first to disturb the 
public tranquillity, by seditions and conspiracies. It is such a 
spirit, predominating over a character otherwise good, that 
Shakspeare paints in Cassius. Caesar thinks him to be feared, 
because, 

«< Such men as he be never at heart’s ease, 

While they behold a greater than themselves ; 

And therefore are they very dangerous.” 

It is this temper that spurs him on, “ in envy of great Caesar,” 
to “ humour, and win, the noble Brutus,” to the assassination. 
It is the same spirit, that renders him unscrupulous, 

“ To sell and mart his offices for gold, 

To undeservers;” 


!26 OF THE NATURE OF STOCK, 

and, to wring 

“ From the hard hand of peasants, their vile trash, 

By any indirection.” 

When, therefore, the mere desire of distinction, is the object 
for which wealth is generally pursued, there, the pursuit infallibly, 
at length, withdraws from the path of virtue, and excites those 
engaged in it, to a disregard of their own honor, and the suffering 
of others. 

“ Magnum pauperies opprobrium jubet 
Quidvis et facere et pati, 

Virtutisque viam deserit arduas.” 

• When such is the character of only a small minority of those 
who pursue wealth, it is not injuriously felt. The energy of their 
motion, rather quickens the progress of the whole, than retards it- 
It is very different, when such characters compose the majority 
of those engaged in such pursuits. A chaos of deceit, treachery, 
knavery, is then generated, in which truth, generosity, good faith, 
compassion, perish. Hence it was, that the pursuit of wealth, 
in ancient times, was held as absolutely incompatible, with the 
lowest degree of liberal sentiment, virtuous spirit, or common 
honesty. Plato expressly says, that in commerce and traffic 
there is no such thing as an honest man, and numerous passages 
from the Greek and Roman writers might be- cited in proof, that, 
in those days, it w T as admitted on all hands, that the character of 
the money-making man, was uniformly vicious. The following 
is one of the most striking I can presently find. 

“ It is impossible for the same man to be given to sensual 
pleasures, and to the love of money, and to be religious. t For 
he who is a lover of pleasure will be a lover of money, and he 
who loves money, must of necessity be unjust, and a violator 
of the laws of God and man.”* It is here not thought necessary 
to give any proof of the assertion, on the contrary, it is taken as 
an admitted fact, from which a consequence may be deduced. 

In those times, therefore, the pursuit of wealth was disreputa- 
ble, and the self-love of no one could be gratified by the charac- 
ter it procured him. We are apt to conceive the observation of 

* O <pdr)dov6v xou (pdocrcopctTov xai (pdo/Qi]fiaTOv xai cpdoQsov rov 
6.vtov adwazov sivai 6 yag cpdrjdovog xav (pdoar a/uazog 6 8s cpdocrwpazog 
navzcog xcu cpdo/QTjfiazog. O 8s ydo/grpiazog avayxrjg adit tog. O 
8s ctdixog sig fisv 6eov avooiog stg 8s avd-owizovg i tagctvofzog. Demophili 
Similitudines. 


OF THE NATURE OF STOCK. 


127 


St. Paul, that “ the love of money is the root of all evil, and in- 
fallibly leads to wickedness,” as springing from the ascetic spirit 
in which he contemplated matters, whereas it is common to him 
with all the moralists of his time, even with the most liberal of 
them, and must be held as a mere statement of what was then 
an obvious fact. Thus Horace calls it the same thing, “ summi 
materiam mali,” and the voice of the whole age agrees with him. 
An assiduous care to the increase of fortune was then esteemed 
evil, and the source of evil, and was reprobated accordingly. It 
was evil, because generally proceeding from a grasping, sordid, 
selfish spirit. It was the source of evil, because the great exciter 
of fraud, knavery, and violence. It is in more moral communities 
alone, where the real springs of action are not selfish, and where 
a desire for the good of others is one of the chief movers, animat- 
ing the exertions, and giving a tone to the feelings and actions of 
the whole body, that the virtuous and liberal mind, sympa- 
thizes with, and approves the conduct of the man, who 
gives his days to labor, and his nights to engrossing care, for the 
purpose of increasing his gains. There, such a life is not deemed 
selfish, sordid, or unhappy, because there, it is known generally 
to proceed from a totally opposite spirit, and to have for its sus- 
taining principle, the welfare of others, rather than of the indi- 
vidual ; and there, it is esteemed praiseworthy, because there, 
its general tendency is good, not evil. There, too, ambition alone 
may, no doubt, lead those who w r ant other motives into the paths 
of sober industry and frugality, because the desire of excelling in 
whatever is attempted, must impel individuals actuated by it, to 
every pursuit that other men gain credit by. It is not perhaps 
the object gained, so much as the gaining of it, which gives it 
value in their eyes. But, it is only where such conduct pro- 
cures consideration, and respect, that we can expect it will be 
steadily pursued by such persons. Where patient and assiduous 
industry, and undeviating integrity, procure the highest name, 
and fame, they will be followed by many who value them not in 
themselves. But this observation only proves, that we have to 
seek for the general course of action of the individual, in the cir- 
cumstances determining that of the society. 

In modern times, again, and in particular communities, mar- 
riage and offspring, and the consequent desire of family aggran- 
dizement, may often succeed in imposing on those, to whom the 


128 


OF THE NATURE OF STOCK. 


welfare of others is naturally of little moment, the necessity of 
providing for that welfare, and therefore may often generate and, 
keep up a much stronger attention to the cares of futurity, than 
could be excited by a mere regard to self interest. But, it is 
to be observed, that the mode in which the passions prompting 
to marriage will operate, must depend, on the feelings, and con- 
sequently, manners, pervading the society. When the general 
-feelings and morals become corrupt, marriage will never be 
sought after, by men in easy circumstances, for the mere plea- 
sures of sense. Socrates remarks this to his son, when pointing 
out the obligations he owed him for giving him being* and every 
pure voluptuary is ready to curse, with Eloisa, “ all human ties.” 

The indulgences to which these passions prompt, when the 
feelings become purely selfish, will, indeed, I suspect, be found 
to be the great weakeners of this very principle. Out of the 
heart are the issues of life, and the evils to which they give rise 
are the worst of any, because they contaminate the sources of 
all healthy energy and activity, at the very fountain head. It is 
to them, that Horace, in my opinion, truly traces, the load of 
mischief which in his time pressed on Rome, and which finally 
overwhelmed her ; 

“ Fsecunda culpae secula, nuptias 
Primum inquinavere, et genus et domos : 

Hoc fonte derivata clades 
Inque patres populumque fluxit.” 

Even on the supposition of legitimate offspring, it is only in 
countries where the general sentiment applauds that course of 
action, that the man actuated by mere self interest, can be sup- 
posed to pride himself on rearing up and providing for a family, 
in preference to enjoying, without restraint, all the pleasures he 
may be able to procure. Cool, calculating, self interest, would 
thus speak. “ Who knoweth whether his son shall be a wise 
man or a fool ? Yet shall he have rule over all his labor, where- 
in he hath labored, and wherein he hath showed himself wise 
under the sun. This is also vanity. Wherefore I perceive 
that there is nothing, better than that a man should rejoice m 
his own works : for that is his portion : for who shall bring him 

* Kal (IBV 6v T&v ye &(pQo3i(ncov Uvexu naidonoiSKT&at, t ov 5 <xV'd'Q& 7 tov$ 
{molafiS&voig- inh tovtov ye mv tmolvrjovTUv peaxou (lev ot 6dol peart 
Se t & OiXTyuaTa. Xenoph. Memorabilia. 


I 

OF THE NATURE OF STOCK. 129 

to see what shall be after him : it is good and comely for one to 
eat and to drink, and to enjoy the good of all his labor that he 
taketh under the sun, all the days of his life, which God giveth 
him, for it is his portion. 5 ’ We find accordingly that in states 
where mere selfish enjoyment is the chief principle of action, that 
the interests of posterity are neglected. Thus, among the Roman 
writers, the heir is always represented in an invidious light, and 
to save for him is represented as a folly. The writings of Horace, 
and the contemporary poets, throughout, exemplify the prev- 
alence of this feeling. 

“ Parcus ob hceridis curam — 

Assidet insano. — ” 

F or a frightful picture of causes and effects, in this particular, the 
epigram of Martial to Titullus beginning, 

“ Rape, congere, aufer, &c.” 

might be quoted. But, it is time to conclude a digression, on 
which perhaps I have somewhat prematurely entered. 

We shall then assume that there are motives, as above enu- 
merated, derived from the principles of human nature, acting on 
all men, and exciting them to expend what they presently pos- 
sess in providing for future wants, as there are others, derived 
from the same source, tempting them to lay it out in the gratifi- 
cation of their immediate wants. The strength of the effective 
desire of accumulation, in any man or society of men, or this 
desire manifested in action, is determined by the preponderance 
of the one class of motives, over the other. It is manifested, and 
may be measured, by the willingness of the individual, or indi- 
viduals, to lay out a certain amount to-day, in order to produce 
the double of that amount at a period more or less remote, that 
is, at the expiration of one, two, three, &lc. years. 


17 


CHAPTER VII. 


OF SOME OF TIIE PHENOMENA ARISING FROM THE DIFFERENT DEGREES 
OF STRENGTH OF THE EFFECTIVE DESIRE OF ACCUMULATION IN DIFFER- 
ENT SOCIETIES. 

The effective desire of accumulation is of different degrees of 
strength, not only in different societies, as compared with each 
other, but also in the several individuals composing the same 
society as compared together. Disregarding, however, for the 
present, the effects produced on the formation of instruments, 
from diversities in the strength of this principle among individ- 
uals in the' same society, we are, in this chapter, to endeavor to 
trace solely some of those resulting from the operation of causes 
varying its strength in different societies. As has been already 
stated, there are three other causes operating in the formation of 
instruments ; the quantity and quality of the materials owned by 
any particular society ; the progress which the inventive faculty 
has made in it ; and the rate of the w T ages paid the laborer. The 
first of these depending on the original constitution of the whole 
globe, and its different regions, and the correspondence between 
these and the corporeal system of man, is determined by circum- 
stances, the consideration of which would be foreign to the pre- 
sent inquiry. With regard to our subject it is to be taken as an 
important but ultimate fact. The causes on which the progress 
of the inventive faculty seems chiefly to depend, will form the 
subject of a subsequent chapter. At present, the extent of that 
progress is to be received simply as a circumstance of admitted 
importance. 

The rate of the wages of labor, the last of the causes affecting 
the formation of instruments, though a subject of investigation in 
itself highly interesting, and closely connected with this whole 
inquiry, is not, as has been already stated, to be otherwise con- 


OF THE NATURE OF STOCK. 


131 


sidered in these investigations, than as an existing circumstance, 
the operation of which is also of importance in the determination 
of the extent to which the stock of materials, in possession of 
any society, will be wrought up by it, but the laws regulating 
which lie beyond our prescribed limits. So considered, a low 
rate of wages may be esteemed, in its direct effects, as producing 
the same results as an improvement in the quality of the mate- 
rials operated on, or an extension of the power to operate on 
them, through an advance in the progress of invention. All 
these cause the same returns to be produced from a less expen- 
diture, or greater returns, from the same expenditure. They 
all, therefore, place a greater range of materials within compass 
of the accumulative principle, and occasion the construction of a 
larger amount of instruments. The advance of invention, how- 
ever, differs from a lowering in the rate of wages, in being a 
quantity to the increase of which we can set no bounds, whereas, 
we soon arrive at a limit to the possible diminution of the rate of 
wages. In the principles on which they depend, and in their 
ulterior consequences they differ, I believe it will be found, still 
more widely. 

The first example I shall take, of the effect, of circumstances 
in moulding the characters of communities, and of these again, 
in determining the extent to which they carry the formation of 
instruments, will be that of the American Indian. 

The life of the hunter seems unfavorable to the perfect 
developement of the accumulative principle. In this state man 
may be said to be necessarily improvident, and regardless of 
futurity, because, in it, the future presents nothing, which can 
be with ' certainty either foreseen, or governed. The hunting 
grounds are the sources from which, among hunters, the means 
of subsistence are drawn. But these belong to the nation or the 
tribe, which alone therefore, can make more abundant provision 
for futurity by securing to itself a domain more extensive, or 
better supplied with wild animals ; or meet poverty, by being 
restricted to one more narrow, or barren. As regards his future 
means of living, every member of such a community thinks of 
nothing but whether the supply of game will be plentiful, or 
scanty ; in the one case, he knows that he will enjoy abundance, 
in the other that he must endure want. In such societies there- 


132 


OF THE NATURE OF STOCK. 


fore, the view can never be directed to any distant future good, 
which present exertion may secure to the individual, but is con- 
fined to what, by that exertion may be added to the power, or 
the territory of the tribe. What applies to the individual hun- 
ter, applies to his family. Their comfort depends less on his 
particular exertions, than on circumstances affecting the whole 
band, or little nation to which he belongs. It is only in infancy 
that the wants of the young savage are, to any great extent, pro- 
vided for by his parents. Afterwards he feasts, or fasts, like 
every other member of the community, as abundance, or scarcity 
reigns in the camp. That camp, indeed, may be said to form 
the family of the Indian. His whole thoughts, and affections 
centre there, nor has he any cares for a distant futurity, either 
for himself, or his offspring, separated from the common suffer- 
ings or enjoyments of his tribe. 

Were the causes determining the future good or evil flow- 
ing to each of these great families, to be within reach of the 
energies of the individuals composing them, they would have a 
steady aim for their exertions, and having the means, might 
acquire the habit of purchasing future plenty, and security, by 
present toil, and privation, and of tracing out with certainty, remote 
consequences, to immediate acts. But this is a mode of thought 
and action, to which the circumstances of their condition are op- 
posed. As the utmost prudence, foresight,, and fortitude, can but 
little affect the future welfare of the individual, so, their power 
to promote the prosperity of the society, is limited and precarious. 

If a tribe of hunters occupy a healthy territory, and one plen- 
tifully supplied with game, they are pressed on by others, eager 
to seize on these advantages, and so are continually engaged in 
destructive wars. While the individuals composing such a tribe, 
can slaughter their foes, that is, the surrounding tribes, or can 
drive them to a distance, they want for nothing. The defeat of 
their own tribe, is the only calamity they have to dread. This 
calamity is every now and then overtaking them. 

War is always a game of hazard. In such a state of society 
it is peculiarly hazardous. There the art of war is surprise. 
The scanty population which the chase can alone maintain, is 
divided into small bands, living widely apart — mere points in 
a vast continuity of wilderness. In such situations warfare can 
never be open. The attacking party must advance with secrecy ; 


OF THE NATURE OF STOCK. 


133 


were they to make their approach known, their enemies would 
only wait for them, if convinced of their own superiority ; other- 
wise, they would retire, and, if acting prudently, and skilfully, 
never suffer themselves to be seen, unless to strike their foes, 
themselves being safe, in some well-conducted ambush. But 
where success depends upon concealment, and surprise, it also 
depends on chance. No precautions can succeed in always 
guarding a small band, encamped in the midst of a great forest, 
from being unexpectedly assailed. No precautions can prevent 
the track of a party advancing, through an enemy’s country, 
from being occasionally discovered. Victory, or defeat, and all 
that follow them, depend on the slightest accident. Fortune is 
a goddess, on whose influence the schemes of the most skilful, 
and greatest captains, are always in some measure, dependent, 
but here she reigns supreme. 

The effects of these circumstances are increased by the char- 
acter of the laws of war of the savage. His wars are wars of 
extermination. They cannot well be otherwise. Were he 
pressed to defend, what he thinks requires no defence, but is 
prepared alike to execute on others, or suffer himself, he might 
so do from the necessity of the case, the plea which man always 
urges for every evil he inflicts on his fellows. He can neither safely 
let his enemies go, nor possibly retain them captive. In the 
former case they would be as much" to be dreaded as ever. In 
the woods half a dozen men may make war upon a nation, as 
wars are there conducted. That is, they may waylay, surprise, 
and slaughter detached parts of them. Nor can he retain cap- 
tives. They would both be useless, and must escape. A plunge 
into the surrounding forest sets them free. Hence it is not con- 
quest, as with other warriors, but destruction, that is his aim, and 
what he executes on others, when he has the power, he sees 
continually impending over him, from them, when fortune gives 
them the power. * 

Thus the whole existence of the hunter is chequered by quick 
changing extremes. Abundance, famine, the fierce joys of vic- 
tory, the horrors of surprise and defeat, rapidly succeed each 
other, in an order which he can neither pretend to foresee, nor 
direct. Like all men in similar circumstances, he refers the 
events, of which his being is the sport, to the continual and 
capricious agency, of supernatural powers. All the good that 


134 


OF THE NATURE OF STOCK. 


happens to him, is from their having been , propitious to his de- 
signs, and from his having rightly interpreted their omens ; all 
the evil that befalls him, arises, in his conception, from their 
hostility, or from his having mistaken, or neglected, some vision, 
or token they sent him. The warrior turns back, in the middle 
of an expedition, if his sleep be disturbed by a dream betokening 
evil ; the unsuccessful hunter accuses neither his unsteady hand, 
nor imperfect sight, but some magical influence hanging on his 
weapon which only the priest or sorcerer can therefore remove. 
The direction of all events whose arrival is distant, seems thus to 
the hunter of the woods to lie entirely beyond his control ; and, 
instead of endeavoring- to make the ease, or abundance of the 
present, provide for the evils of the future, he prides himself in 
enjoying the good of to-day undisturbed by a single care, and, in 
feeling, and knowing, that he can bear the ill of tomorrow without 
a murmur. 

Hence the Indian has a character altogether his own. Feeling 
himself hurried on by the course of events, not directing it, he 
thinks as little of refraining from the pleasures that course may 
offer him, as of shrinking from the pains to which it may expose 
him, and indulges, therefore, without restraint, in the enjoyments 
of the hour. His intellectual faculties, unaccustomed to deduce 
remote consequences from immediate causes, and still less accus- 
tomed to adopt as a ground for action, and tp watch, carefully, 
and anxiously, any concatenation of the sort, are feeble ; either 
in themselves, or from inaction. His passions, on the contrary, 
are strong. Unaccustomed to reflection, the warm and generous 
feelings of affection and gratitude, as well as the darker ones of 
hatred and revenge, are often formed hastily, and on inadequate 
grounds, but while they last they are exceedingly vehement. His 
tribe forms the point in which all these feelings centre ; it is in fact 
his family, with which all his joys and sorrows are in common. 

An attention to the effects, naturally flowing from this char- 
acter, will, explain many circumstances in the present con- 
dition, and past history of these tribes, which are in themselves 
interesting, and which are closely connected with our sub- 
ject. Of all those circumstances, none is more remarkable, than 
their neglecting, or refusing, to adopt the arts, of the new neigh- 
bors which the discovery by Europeans of the country they in- 
habit, brought, and has kept in contact with them. Surrounded 


OF THE NATURE OF STOCK. 


135 


as are the scattered wrecks of those once numerous tribes, by a 
great people, rapidly converting the soil, and almost whatever 
grows on it, or is hid beneath it, into instruments, capable of 
plentifully supplying every variety of future want, they are yet 
unable to imitate them. This deficiency among them, of the 
effective desire of accumulation; the principle leading to the 
formation of instruments, seems to arise both from a want of mo- 
tives to exertion, and from a want of the principles and habits of 
action which would lead to effective exertion. 

The settlement of their country by the European race, has in 
itself, gradually diminished, or entirely destroyed, the political 
importance of their tribes, and consequently, the ties binding 
together the members of each of these communities, and leading 
them to feel, and to act, in common. Nor have these been re- 
placed by others. Those growing out of the family relations, in 
other states of society, — the anxious prospective care of the 
parent, and the exertions, the pleasures, and the duties thence 
arising, — have not had time to spring up. Hence the Indian 
continues to seek shelter in apathy, and to regard life and its 
enjoyments, both for himself and his children, as did his fore- 
fathers, gifts to be made the most of while they last, but which 
no care can secure, and which, therefore, it is his business not to 
provide for the continuance of, but to learn calmly to resign when 
called on. He thus sits, listless, in the midst of the incessant 
activity and industry that surround him, incapable of discovering 
an adequate cause for the never-ceasing care and toil. The 
motives that excite the white man, though possessed of means 
that would enable him with his more needy brethren, abundantly 
to enjoy the present, to devote himself, instead, to labors, to 
which no season brings a respite, in order to bring about events, 
that may provide for the wants of some remote and uncertain 
futurity, are to him incomprehensible. Instead of applauding 
the conduct, in his secret soul he censures the mean, timorous, 
and, as it seems to him, selfish spirit, which prompts it. 

But, besides a want of the motives exciting to provide for the 
needs of futurity, through means of the abilities of the present, 
there is a want of the habits of perception and action, leading to 
a constant connexion in the mind of those distant points, and of 
the series of events serving to unite them. Even therefore, if, 
motives be awakened capable of producing the exertion neces- 


136 


OF THE NATURE OF STOCK. 


sary to effect this connexion, there remains the task of training 
the mind to think, and act, so as to establish it. 

These deficiencies in the motives to exertion, and in the hab- 
its of action of the Indian, serve to account for the condition of 
the remnants of the tribes scattered over the North American 
continent, in situations where they are in contact with the white 
man. There is a general similarity throughout, that will, I be- 
lieve, render an example, taken from one part of the continent, 
sufficiently illustrative of the state of the whole. 

Upon the banks of the St. Lawrence, there are several little 
Indian villages. They are surrounded, in general, by a good 
deal of land from which the wood seems to have been long ex- 
tirpated, and have, besides, attached to them, extensive tracts 
of forest. The cleared land is rarely, I may almost say never, 
cultivated, nor are any inroads made in the forest for such a pur- 
pose. The soil is, nevertheless, fertile, and were it not, ma- 
nure lies in heaps by their houses. Were every family to inclose 
half an acre of ground, till it, and plant in it potatoes and maize, 
it would yield a sufficiency to support them one half the year. 
They suffer too, every now and then, extreme want, insomuch 
that, joined to occasional intemperance, it is rapidly reducing 
their numbers. This, to us, so strange apathy proceeds not, in 
any great degree, from repugnance to labor ; on the contrary, 
they apply very diligently to it, when its reward is immediate. 
Thus, besides their peculiar occupations of hunting and fishing, 
in which they are ever ready to engage, they are much employed 
in the navigation of the St. Lawrence, and may be seen laboring 
at the oar, or setting with the pole, in the large boats used for 
the purpose, and always furnish the greater part of the additional 
hands, necessary to conduct rafts through some of the rapids. 
Nor is the obstacle aversion to agricultural labor. This is no 
doubt a prejudice of theirs; but mere prejudices always yield, 
principles of action cannot be created. Where the returns from 
agricultural labor are speedy, and great, they are also agricultur- 
ists. Thus, some of the little islands on lake St. Francis, near 
the Indian village of St. Regis, are favorable to the growth of 
maize, a plant, yielding a return of a hundred fold, and forming, 
even when half ripe, a pleasant and substantial repast. Patches 
of the best land on these islands are, therefore, every year, cul- 
tivated by them, for this purpose. As their situation renders 


OF THE NATURE OF STOCK. 


137 


. them inaccessible to cattle, no fence is required ; were this ad- 
ditional outlay necessary, I suspect they would be neglected, 
like the commons adjoining their village. These had apparently, 
at one time, been under crop. The cattle of the neighboring 
settlers, would now, however, destroy any crop, not securely 
fenced, and this additional necessary outlay, consequently bars 
their culture. It removes them to an order of instruments, of 
slower return, than that which corresponds to the strength of 
the effective desire of accumulation, in this little society. 

It is here deserving of notice, that what instruments of this 
sort they do form, are completely formed. The small spots of 
corn they cultivate are thoroughly weeded, and hoed. A little 
neglect in this part would, indeed, reduce the crop very much ; 
of this experience has made them perfectly aware, and they act 
accordingly. It is evidently not the necessary labor, that is the 
obstacle to much more extended culture, but the distant return 
from that labor. I am assured, indeed, that, among some of the 
more remote tribes, the labor thus expended, much exceeds 
that given by the whites. The same portions of ground being 
cropped without remission, and manure not being used, they 
would scarce yield any return, were not the soil most carefully 
broken, and pulverized, both with the hoe and the hand. In 
such a situation, a white man would clear a fresh piece of ground. 
It would perhaps scarce repay his labor the first year, and 
he would have to look for his reward in succeeding years. 
On the Indian again, succeeding years are too distant to make 
sufficient impression, though, to obtain what labor may bring 
about in the course of a few months, he toils even more assid- 
uously than the white man. The wages of labor with him, are 
lower than with the white man, for his wants are fewer. But 
for this, the range of materials, coming within reach of his effec- 
tive desire of accumulation, would be even more limited than 
it is, and the amount of instruments formed by him, less. 

Similar observations will apply to all the remnants of the race, 
scattered through the parts of the North American continent, to 
which the industry and enterprise of the white man, have brought 
modem arts and civilization. They can no where be said to 
form an agricultural people. All the great tracts of land, reserv- 
ed for their use, throughout the continent, retain their native for- 
est character ; and it is only at great intervals, where spots of 
18 


138 


OF THE NATURE OF STOCK. 


soil appear offering peculiar facilities for cultivation, that the 
riches of the earth are even partially brought into action. When 
such materials are neglected, it is not to be supposed that others, 
requiring greater strength of the accumulative principle to form 
them into instruments, will be put to use. None, therefore, even 
of the most common handicrafts, which they see the white man 
continually exercising, are to be found among them. The axe, 
and the knife, are almost their only tools. Their houses, their 
furniture, their clothing and utensils are all similar, and of a sort 
to serve only the needs of the moment. Nothing is either re- 
served or provided for a futurity in any ways distant. Their 
stock of instruments being thus confined to such as are of the 
most quickly returning orders, a vast mass of materials is neglect- 
ed, which by another race, governed by other principles of action, 
are converted, or converting, into the means of abundantly sup- 
plying the necessities, and enjoyments of a numerous population. 
They thus afford a striking instance, of the effects resulting from 
a great deficiency of strength in the accumulative principle. 
They have skill, adequate to the formation of instruments, capa- 
ble of ministering to the necessities and comforts of a numerous 
population, for with the powers of fire, the axe, and the hoe, the 
great agents in converting the forest to the field, they are well 
acquainted ; they have industry, content with a very moderate, 
if immediate reward ; yet, from inadequate strength in this prin- 
ciple, these all lie inert, and useless, in the midst of the greatest 
abundance of materials ; and, the means for existence in the 
time to come not being provided, as what was future becomes 
present, want and misery arrive with it, and these tribes are dis- 
appearing before them. The white man robs their woods and 
waters of the stores with which nature had replenished them, 
and the arts, by the communication of which he would compen- 
sate for the spoliation, are despised. 

Though the civilized man may be truly said to have been the 
greatest enemy of the Indian, yet he has not always been so 
wilfully, and, in many instances, he has endeavored to be his 
benefactor. But, though his endeavors may occasionally, for a 
time, have arrested the progress of the evil, they have never 
altogether removed it, or been of permanent advantage. Of all 
attempts of the kind, that of the Jesuits, in Paraguay, seems to 
have been productive of most good, and to have given the fairest 


OF THE NATURE OF STOCK, 


139 


promise of ultimate success. This partial success, is evidently 
to be traced, to the usual talent of those fathers, in a clear per- 
ception of the actual circumstances of the condition, and disposi- 
tion of the men with whom they had to deal, and to their usual 
ability in converting these circumstances into means of accom- 
plishing the ends they had in view. 

Their plan presents two great features. They wrought upon 
the Indians through that, which was alone in them capable of 
exciting to extended action, their love of their several nations, 
and devotion to their interests : they took every means to show 
them that they could, and would, promote these interests, and 
thus identifying themselves with the national existence and pros- 
perity, transferred to their order, a large portion of the strong 
feelings arising from benefits received from, and obligations and 
duties owing to his tribe, which are the great >movers, and rulers, 
of the being of the Indian. 

The efforts of the missionaries seem first to have been directed 
to convince the chiefs, and leaders, of the several tribes to which 
they penetrated, of the sincerity of their desire to be of service 
to them. As the messengers of a religion, promising peace on 
earth, and immortal happiness after death, they had claims on 
their attention which are foreign to our subject. Besides these 
however, as the possessors of the arts and powers of civilization, 
they had others, which were more palpable to the comprehen- 
sion of the savage. Europeans were known by this unfortunate 
race, as possessors of powers so great, as to appear supernatural ; 
but they had hitherto been known only as enemies and oppres- 
sors, the bearers of unspeakable calamities or utter ruin. Once 
then they were convinced, that the white men who now came to 
them, were really friends, and were desirous of exerting those 
powers for their preservation and happiness, which had hitherto 
been employed for their destruction, they were ready to welcome 
them as their best benefactors, and most powerful protectors. 
The usual intelligence, prudence, and fortitude of the fathers did 
not desert them on this occasion, and, though not without the 
expense of the martyrdom of several of the order, they succeeded 
in impressing the Indians with the belief, that they were really 
their friends. The rest of the task was comparatively easy. 
Convinced on this head, the savages willingly, and immediately, 
became docile disciples. Fully satisfied of the advantages, which 


140 


OF THE NATURE OF STOCK. 


European arts give to a people, they set themselves with zeal to 
acquire and practise them, for the benefit of their several tribes. 
Though not for his individual advantage, or that of his family, 
would the Indian sacrifice present pleasure or embrace present 
toil ; for the good of his nation he had been taught, and was ready 
to bear, or forbear, any thing. The Jesuits had, therefore, only 
to teach what it was necessary to do, or endure. The details 
they have left us of their progress, are generally interesting, 
sometimes amusing, not unfrequently, to those unacquainted with 
the peculiarities of the Indian character, almost incredible. 

They themselves, in the first instance, taught their proselytes 
how agricultural operations were to be performed, by taking the 
spade, and other instruments, in their own hands. But, when 
thus, by precept and example, they had brought them to be able 
to execute the several operations of ploughing, sowing, reaping, 
&c. the difficulty was but half over. Without the constant 
superintendency, and vigilance, of their instructers, they never 
would have practised them. Thus, at first, if these gave up to 
them the care of the oxen with which they ploughed, their in- 
dolent thoughtlessness would probably leave them at evening 
still yoked to the implement. Worse than this, instances occurred 
where they cut them up for supper, thinking, when reprehended, 
that they sufficiently excused themselves by saying, they were 
hungry. 

By the indefatigable perseverance, and dexterous management 
of the missionaries, they were, however, at last, brought so to 
labor the earth, as, in that fertile soil and warm climate, to pro- 
duce abundant returns. They were also at peace with one 
another, and feared by their enemies. The tranquillity, the 
security, and the plenty, they thus enjoyed, gave the Jesuits 
additional claims on their confidence and gratitude, which the 
good fathers seem to have taken care should be made sufficiently 
apparent to them. Hence it was, as Charlevoix tells us, that they 
thought they could never sufficiently testify their affection and 
gratitude for those, who had rescued them from barbarism and 
idolatry, and who, in spite of the most severe persecution, and 
the greatest toil, had procured them all the advantages they 
enjoyed. They continually recalled to mind the miserable state 
from which they had been brought, the parents instructed their 
children, and they saw, with their own eyes, the condition of the 
neighboring nations, who had not participated in their happiness. 


OF THE NATURE OF STOCK. 


141 


It was by no means wonderful, as he continues, that these things 
produced an attachment for the missionaries, that was without 
bounds. 

The additional authority and influence thus acquired, they 
employed in enforcing stricter obedience, and increased industry, 
and gradually leading on their disciples to the practice of the 
finer and more difficult arts. In this they perfectly succeeded, 
so that there were every where to be seen, says the same 
author, workshops of gilders, painters, sculptors, goldsmiths, 
watchmakers, carpenters, joiners, dyers, &c. In the exercise of 
these useful and ornamental arts, we must not suppose the 
artists were animated by the motives that excite similar labors 
elsewhere. They seem scarcely to have had an idea of personal 
property, or individual gain, but to have been as mere children, 
looking up to the Jesuits for every thing, and ready to do every 
thing for them, or submit to any thing from them. 

“ These fathers,” says Ulloa, “ have to visit the houses, to ex- 
amine what is really wanted ; for, without this care, the Indians 
would never look after any thing. They must be present too, 
when animals are slaughtered, not only that the meat may be 
equally divided, but that nothing may be lost.” “ It has been ne- 
cessary,” says Charlivoix, “ to appoint superintendents, who 
inspect every thing accurately, and see if they are busy, if their 
cattle are in good condition, Sic. The labors of the women are 
regulated, as well as those of the men. At the beginning of the 
week, there is distributed among them, a certain quantity of wool, 
and cotton, which they are obliged to return, on Saturday eve- 
ning, ready for the loom. But, notwithstanding all this care and 
superintendence, and all the precautions which are taken to pre- 
vent any want of the necessaries of life, the missionaries are 
sometimes much embarrassed. This proceeds from three defects, 
of which the Indians have not yet been corrected, their improvi- 
dence, indolence,* and want of economy, so that, it often happens, 
that they do not reserve themselves a sufficiency of grain, even for 
seed. As for their other provisions, were they not well looked 
after, they would soon be without wherewithal to support life.” 

* Indolence and improvidence are, in our system, reduced to one defect. 
Indolence is, the not laying out present labor to secure future abundance. 
Improvidence, the squandering present abundance, in disregard ot future 
coming want. They both proceed from the predominance of the present over 
the future, the low strength of the effective desire of accumulation. 


OF THE NATURE OF STOCK. 


142 

The mode of operation, which the Jesuits adopted, had un- 
doubtedly the advantage of bringing out all the energies of the 
Indian. He was thus induced willingly, and therefore zealously, 
and successfully, to apply his powers to the acquisition and prac- 
tice of European arts, and, while the missionaries maintained 
their power, and formed a part of the polity which their sagacity 
and perseverance had established, it gave every token of pros- 
perity and vigor. Their prudence and providence led into 
efficient action the desire, which every individual felt for the 
future prosperity of his tribe. The powers of the social and 
benevolent affections of the mass had free course, and what was 
wanting in intellectual energy, being supplied by the fathers, the 
desire of accumulation of the whole body became sufficiently 
effective and strong, to form a larger stock of instruments. What, 
therefore, might, at first sight, strike us as the most difficult part 
of the project, the establishing a community of goods, and inter- 
ests, was, in reality, that which rendered it of easy execution. 
With all the advantages attending such a form of society, the 
freedom from strife, jealousy, contention, and care, enjoyed by 
the great majority, it had also the disadvantage of requiring, and 
therefore exciting, in the multitude, little, or no exertion of the 
intellectual faculties. The converts had become, or were be- 
coming, mere machines in the hands of the missionaries. The 
whole stock of instruments formed by the common labor, was 
in the possession of the fathers, and the share which the Indians 
received of the returns, depended on their pleasure. They were 
in fact regarded as beings of a superior order, whose actions were 
of necessity right, and whose slightest wishes were laws. 

If we judge from what is known of the state of the American 
continent at its discovery, it would seem that this form of society, 
is that which the hunter, changing directly to the agriculturist, 
naturally assumes. His devotion to the interests of the tribe, 
passes there into affection for the person, and blind obedience to 
the will of the chief. The accounts we have of the condition of 
the kingdoms that the Spaniards found established in the most 
fertile regions of the continent, describe the power which the 
rulers possessed, and the reverence paid them, as excessive. 
The people seem to have, in general, approached the condition 
of slaves, and to have had a large share of the defects of that 
condition, a want of intelligence and energy. 


OF THE NATURE OF STOCK. 


143 


Our own barbarian ancestors, such as they are described by 
Tacitus, l^ave been often likened to the savage aborigenes of 
North America. But, though there may be some points of 
resemblance, the parallel will be found to fail, in several impor- 
tant particulars, which, as they seem to have operated through 
the influence they have exerted on that principle, the effects of 
which we are at present considering, may be allowed to claim 
our attention for a little. 

The race, whose occupation of the forests and wildernesses, to 
the northward of the Roman Empire, made these, in the days of 
its strength, to be regarded as the regions of mystery and wonder, 
in those of its weakness, of well-founded, and increasing anxiety, 
and dread, were properly shepherd warriors. Though the ex- 
citement of the chase frequently gave fit employment to their 
ardent spirits, and its toils to their hardy frames, and though its 
products ministered to many of their wants, their cattle were yet 
their main support, and to provide for the sustenance of these, 
their great business. But the possession of flocks and herds, 
implies a considerable degree of care and foresight, both in pro- 
tecting, and making provision for them, and in avoiding to con- 
sume too great a number of them. It also implies the existence 
of private property to a large amount, and, consequently, of 
strength in the ties binding families together. The parent, if he 
desires to see his offspring enjoy plenty, must exert himself to 
procure it for them. The performance of this duty gives him 
claims on their gratitude, and draws closer the connexion between 
them. The sort of life they lead too, demands less of severe 
exertion, and affords longer intervals of ease. It brings them 
together in larger bands and societies, of which each member has 
rights to defend, and interests to provide for, and thus produces 
the rudiments of law, justice, and the policy of civilized society. 

War may be said to be natural to them, as well as to hunters, 
but it is always open ; concealment is out of the question ; their 
greater numbers, and the necessity of having always with them a 
large train of domestic animals, render it impracticable. They 
have not therefore to fear being surprised and overcome, before 
they can have time to defend themselves. Hence, the members 
of a numerous and warlike pastoral nation, live in comparative 
security. They see that chance has less influence, prudence 
and resolution more. They perceive that they are not altogether 


144 


OF THE NATURE OF STOCK. 


the sport of destiny, but that their fate depends, in a great 
measure, on themselves. Their minds are less shaken, and their 
judgments less clouded by superstitious fears and imaginings. 
The greater security they enjoy renders them also less relent- 
lessly cruel. Utterly to exterminate their enemies is not neces- 
sary ; to break, and drive them off, is sufficient. When, there- 
fore, the fury of the fight is over, mercy has, with them, a place. 

All these circumstances pertaining tQ the condition of pastoral 
nations tend strongly to excite the social and benevolent affec- 
tions, and the powers of reason and reflection, and to give scope 
to their action among them. The pastoral ancestors of the pre- 
sent European race were fierce, cruel, and vindictive barbarians ; 
yet, spite of these forbidding features of their character, we can 
as distinctly trace to them the sources of all the more generous 
and softer virtues, that give happiness to their descendants, as 
we can the free and independent spirit that bestows on them 
liberty and security. Such nations have, therefore, naturally a 
much higher effective desire of accumulation than nations of mere 
hunters. The strength of this principle, in fact, seems with them 
in general, so great, as to incline them to form instruments re- 
quiring a much superior degree of providence and self-denial, to 
that indicated by the breeding of cattle. They are prevented 
from doing so, by their wandering life, and by the wars in which 
they are necessarily constantly engaged. When, for instance, they 
are settled in a country suited to agriculture, and to which the 
knowledge of the art has penetrated, they have a tendency to be- 
come agriculturists ; that is, to change the land, from which they 
draw their subsistence, from an instrument yielding a large return, 
in proportion to the labor bestowed on it, to one yielding a still 
larger return, though requiring proportionally more labor and 
time, and being, therefore, of a more slowly returning order. 

But such a change, though increasing the whole population of 
the state, leaves fewer in it who can be spared from labor, and, 
consequently, fewer soldiers. In pastoral nations, almost all the 
men are warriors ; in agricultural, only a few can be. withdrawn 
from the labors of the field. The latter are therefore, naturally 
inferior to the former in military prowess, and are consequently 
subject to be conquered and destroyed by them. Such seems 
to have been the fate impending over Gaul, from the side of 
Germany, when the appearance of Caesar gave another turn to 


OF THE NATURE OF STOCK. 


145 


affairs. The Gauls, we learn from him, though then inferior, 
had once been superior, in military renown, to the Germans. It 
appears likely, that the revolution had been occasioned, by their 
becoming an agricultural people, which they, in a great measure, 
were, in his time. The Germans, again, preserved themselves 
from the fatal effects of such a change, by the singular national 
custom, or constitution, that obliged them all, every year, to ex- 
change the lands they respectively occupied. By this constant 
transfer of instruments, and of the materials of which they might 
be formed, they took away every inducement to work them up 
into orders of slow return, and confined the members of the 
community to the pastoral condition, which experience had 
doubtless instructed them, was most favorable to military prowess. 

In the times of the Caesars, Europe was thus divided, by an 
irregular line running east and west, into two great parts, 
the one occupied by the barbarians, the other by the Empire. 
To the northward of this line, were many rude nations, strong in 
the mental and corporeal energies of the individuals composing 
them, and in the willingness of each to devote his abilities to 
objects conducive to the good of all, but whose strength was 
largely expended in furious intestine wars. These contests, 
destructive as they were, did not, however, occasion any pro- 
gressive diminution of the vigor of the whole body ; it was 
only the surplus powers of the parts that thus ran to waste. 
The strength of the people of the empire was, on the contrary, 
derived, from their union in one great body, and the power 
thence resulting of the energies of the whole being directed to 
any particular point. But this union, as it had been produced 
by compulsion, augured weakness in the several parts, and was 
the cause of weakness. What each contributed to the common 
good was not of will, but from necessity, and, in the strife thus 
arising, every man learned to consider his own good as separate 
from that of all others. Hence a continually increasing separa- 
tion of interests, and consequent continual decrease of power and 
general decline. The gradually increasing weakness of the em- 
pire, while the strength of the nations to the northward, if not 
augmenting, remained at least unimpaired, rendered the arrival 
of a period when the former should be overpowered by the latter 
inevitable. These barbarians believed, that the riches of the 
earth belonged, of right, to the best ; according to their creed, 
19 


OF THE NATURE OF STOCK. 


146 

the bravest. Their most powerful and warlike tribes, therefore, 
possessing themselves of the more fertile regions, those bordering 
on the line dividing them from the empire, pressed violently 
against it, and, opposed by a force continually diminishing, at 
length burst through it. 

Three great events, each leading on this other, would seem to 
have been the necessary consequence of this revolution. Of 
these, the first was the occupation of the whole continent by the 
barbarians, and the driving back the still onward-urging host of 
their brethren ; the adoption by them of the arts which had 
previously flourished in the empire, and their becoming an agri- 
cultural people, was the second ; and their running the chance 
of being in turn overpowered by the northern warriors, the third. 
Until the arrival of the first period, when, the continent having 
been completely overrun and ravaged by the barbarian multitude, 
had assumed a form closely approximating to that of the territo- 
ries they had formerly occupied, there could be no approach to 
rest, but the tide must still advance. When the receptacle 
vacant for its reception was once completely filled, the mighty 
mass had to recoil on itself. The battle of Chalons fixes this 
period. Europe, with the exception of the corner occupied by 
the Eastern Empire, and which belonged rather to Asia than to 
it, seems then to have been nearly reduced to the state of one 
immense cattle-pasture. But the impetus that had been given 
still continued, and new hosts crowded on to share that, of which 
the last fragments had been divided. The reflux then of neces- 
sity took place. The hosts of the west and the south, under 
Theodoric and Elius, met those of the east and the north, under 
Attilla, on the plains of Champaigne. The vastness of the 
masses and the violence of the shock are shown by the destruc- 
tion produced ; the accounts of the period rating the slaughter 
variously at from one hundred and sixty-two thousand to three 
hundred thousand. 

From this period the great body neither much advancing nor 
receding, was agitated chiefly by fierce internal commotions. 
The time when their violence terminated marks the second 
period, when the general prevalence of agriculture, lessening the 
number of warriors, diminished the extent and frequency of wars. 
The knowledge of the elements of it, and of the other arts, dif- 
fused throughout the various multitude that now peopled the 


OF THE NATURE OF STOCK. 


147 


continent, could not forever lie dormant. It has been already 
observed, that the strength of their effective desire of accumula- 
tion, had been such as to produce a tendency among them to 
give greater capacity even to the materials of which they had 
the command in the northern regions, though at the expense of 
changing them into instruments of somewhat slower return, by 
converting their lands from pasture to tillage. This tendency 
became inevitably stronger, as they advanced into more fertile 
soils and milder climates. The revolution itself took place grad- 
ually. The exact date of the preponderance of the one condition 
over the other, cannot, perhaps, be determined but by the effects 
produced by its arrival. It is only in the state of hunters, or 
shepherds, that nation can literally go to war with nation. In 
the agricultural state, it is not the men of the nation, but a small 
part of them, the soldiery, that fight. Taking this as the criterion, 
we might fix the reign of Charlemagne as that, in which war, as 
the business of European nations, properly ceased. The con- 
clusion of that monarch’s reign, has sometimes been reckoned 
the commencement of a period of weakness in the several states, 
and of want of ability in their monarchs. The historian, it is 
true, for centuries afterwards, finds no events that he esteems 
great to record. His art can call up no pictures of heroes lead- 
ing armies to the field, conquering, or being conquered, over- 
throwing, or establishing kingdoms. Nevertheless, if the view 
we are taking is correct, it is from this era that we must date the 
commencement of strength, not of weakness. The people of 
Europe then began to rise in the scale of industry. They com- 
menced a new era, to which no one can assign a positive termi- 
nation, because it became their occupation to conquer nature, 
and not man, and, to the fruits of the one conquest, we can set 
no limit, whereas the utmost advantages of the other are very 
speedily exhausted. 

It may here be observed, that the difference of the strength of 
the principle of accumulation in nations of hunters, and in pas- 
toral nations, seems to mark out a very opposite destiny to a 
great country overrun by the one, to that which would await it 
from being subdued by the other. The naturally low degree of 
strength of the accumulative principle among nations of hunters, 
prevents them, as we have seen, from forming instruments of 
sufficiently slow return to embrace the materials to which the 


148 


OF THE NATURE OF STOCK. 


arts of civilized life might give capacity. While in their posses- 
sion, therefore, they lie unemployed, and useless. The progress 
of civilization and art, over the continent of North America, is 
now, every day, bringing to light traces of their former presence, 
and evidence, consequently, of the existence there at some remote 
period, of a people far superior in these respects to the tribes that 
occupied all but the southern parts, when discovered by Euro- 
peans. The question has been asked, how did it happen that 
they, and the knowledge and power they possessed, utterly per- 
ished ? In other instances, civilization has either protected its 
possessors, or, if they were overcome, has reacted on their con- 
querors, and spreading among them, has, so to say, subjugated 
and governed them in turn. The history of our own barbarian 
ancestors has been quoted, as a circumstantial account of this 
seemingly natural progress. But, if the principles, the operation 
of which forms our present subject, be correct, they furnish a 
sufficient cause for the diversity of effects, flowing from the two 
events, and show, that, instead of there being any reason for sur- 
prise at the hunter of the woods disdaining the labors and re- 
wards of civilization, it is rather our business to inquire how he 
could ever have been led to adopt them. Had the nations whom 
the north poured forth on the south of Europe, been hunters, 
and, had no extraneous cause intervened, it is not improbable, 
that that continent would, even at the present day, have been 
one wide forest from side to side. 

The third of the great events referred to, the evils and dangers 
arising to the ancestors of the present inhabitants of Europe, from 
their former brethren of the north and east, when the strength of 
their accumulative principle led them to put off the barbarian, and 
employ themselves in giving to the materials within their reach the 
capabilities for the supply of the wants of futurity which art showed 
that they possessed, were felt for many centuries. The change they 
were then undergoing, though it added very greatly to the total 
numbers of the several nations, lessened the numbers of the warriors. 
The instruments they formed being of the more slowly returning 
orders, though the whole income from them was much greater, 
the labor necessary to produce it was more than proportionally 
greater, and the portion of the population left free for the pur- 
poses of warfare was consequently less. It were foreign to 
our purpose farther to allude to this cause of commotion and 


OF THE NATURE OF STOCK. 


149 


revolution, than to observe, that the mischiefs and dangers 
arising from it, seem to have been moderated by the very gradual 
manner in which the change took place, and to have been coun- 
teracted, and finally overcome by the additional power acquired 
through the progress of invention in the arts of civilized life. 

The next example I shall adduce, of the influence of the accu- 
mulation principle, will be that of the Chinese Empire. All 
accounts agree in ascribing to the people of this Empire, a 
peculiarity running through the whole structure of their social 
and domestic life, by which alone perhaps its mechanism can 
be well explained, and which seems to form its great gov- 
erning and sustaining principle. Their moralists and legislators 
appear to have successfully endeavored to give to the feelings, 
naturally springing from the parental and family relations, an 
influence and authority, far superior to what these possess 
among other nations, — 'the power and unity of a regular sys- 
tem of duties and obligations. A father, as the immediate, 
though secondary cause of existence, is regarded with much of 
the feelings that are elsewhere reserved for the infinite and eter- 
nal fountain of all existence, power, and perfection, and, conse- 
quently, claims, as a sacred right, a measure of love, reverence, 
and obedience, that to us seems perfectly unnatural. Both while 
alive, and after his death, he is reverenced, w r e might say adored. 
His descendants form a little distinct society bound together by 
the strongest ties, a system apart from all others, having a com- 
mon centre of action of its own. What is conceived to be a reality 
in families, is metaphorically applied to the whole empire, and 
its several parts. The emperor is the father of his people, his 
affection for them as his children is held to be the animating 
principle of his actions, implicit obedience to him as their parent, 
who can only command what is good, is the first duty of his 
subjects* Each inferior magistrate is also regarded- as the father 
of those over whom he rules. 

The result has been so far happy, that the harshness of des- 
potism is somewhat tempered by the mildness of the paternal 
character. We are so constituted, that no part can be assumed, 
and habitually acted, without, in some degree, moulding our 
nature to its form, and making that a reality, which may at first 
have been only a fiction. It has also been happy in the strength 
it has given to the connexions and affections of those belonging 


150 


OF THE NATURE OF STOCK. 


to the same family, or springing from the same stock. A man 
must be strongly excited to good, and deterred from evil, by 
being aware that his actions and fortunes are the objects of solici- 
tude to every member of the little community to whom he is , 
bound by the ties of blood and kindredsbip ; that they rejoice at 
whatever he accomplishes that is honorable and happy ; and are 
afflicted and disgraced by his imprudencies and errors. 

But, viewing the system on another side, we may perceive 
that evil has sprung out of it. The blending of the characters of 
parent and lord, and thus making of each head of a family an 
absolute master, the judge of right and wrong, places man in a 
situation dangerous to his weakness. It may encourage, at all 
events, it enables him to gratify, without fear, whatever vice or 
immorality is not necessarily open or declared, but may have a 
veil, however thin, of outward decorum thrown over it. Besides 
this, the absolute submission and unreflecting obedience, which it 
inculcates, are much opposed to the expansion of the intellectual 
and moral powers. When all impulses are from without, it is 
impossible that the mental eye should turn steadily on the divinity 
within, or promptly and resolutely execute, what it dictates. 

We perceive a great attempt to organize a society, animated 
by the principles of love and affection, regulated by those of 
virtue. The form indeed exists, but under it there is little sub- 
stance. Hence is generated a mass of apparent contradictions ; 
viewed in one light, we see a great family, wisely and beneficently 
governed ; in the other, a servile herd, crouching beneath the 
sharp lash of selfish despotism. On the one hand is presented 
to us a people, among whom doctrines of a very pure morality, 
of universal benevolence, of devotion to the public good, are 
inculcated both by reward and precept ; among whom learning 
is held in such esteem as to be the sure, and, in theory at least, 
almost the only road to honor and authority ; among whom the 
freedom of the press may be said to have been established a 
thousand years ;* among whom outward decency and decorum 
prevail, and security and order are strictly maintained, not by 


* Where the press is merely a brush, and the types are blocks of wood, 
which a common workman carves out for a few pence, it must of necessity 
be essentially free ; the best proof of this is, that books for which there is a 
demand, licentious publications for instance, are extensively circulated, not- 
withstanding all the efforts of the magistrate. 


OF THE NATURE OF STOCK. 


151 


military authority, but by their own good sense quietly submit- 
ting to the rule of the civil magistrate. On the other hand we 
see this same people, in private, abandoned to gross sensuality, to 
drunkenness and degrading licentiousness ; in public, in affairs of 
trade and traffic, in the business and diplomacy of the state, making 
their individual advantage their sole practical rule of right and 
wrong. 

Such being the character of this singular people, our principles 
would give to them a less strength of the effective desire of 
accumulation than the generality of European nations, but a 
greater than that of other Asiatics. This desire is lessened by a 
propensity to sensual gratifications and selfish feelings, and by a 
state of society where there is any thing to endanger the security 
of future possession. All these produce a tendency to seek the 
enjoyments of to-day, at the risk of leaving the wants of to-morrow 
unprovided for. As compared with other than European nations, 
however, we might expect them to possess no inconsiderable 
portion of the virtues of prudence and of self-control. The 
general diffusion of a tincture of learning, and perception of 
something of the beauty and obligations of moral rectitude, the 
consequent subjection at all events of the more violent passions, 
and the great desire to provide for the wants of their families, 
which the strength of the connexion thus subsisting between 
parent and child engenders, raise them, in these respects, much 
above Asiatics in general. We should, therefore, a priori, suppose, 
that the instruments formed by them must be of orders of quicker 
return, and embracing a less compass of materials, than those 
constructed by European nations ; but of slower return, and em- 
bracing a greater compass of materials, than those to which the 
strength of the accumulative principle carries the other nations of 
Asia. All who have written concerning this great empire agree 
in the statement, that the necessary cost of subsistence is there 
small, and the wages of labor low. To these two circumstances, 
determining their state, is to be added a third. The inventive 
faculty would appear to have been once very active among them ; 
their knowledge of the arts suited to their country is very ex- 
tended. 

Durability is one of the chief qualities, marking a high degree 
of the effective strength of accumulation. The testimony of 
travellers ascribes to the instruments formed by the Chinese, a 


152 


OF THE NATURE OF STOCK. 


very inferior durability to similar instruments, constructed by 
Europeans. The houses, we are told, unless of the higher ranks, 
are in general of unburnt bricks, of clay, or of hurdles plastered 
with earth ; the roofs, of reeds fastened to laths. W e can 
scarcely conceive more unsubstantial, or temporary fabrics.* 
Their partitions are of paper, requiring to be renewed every year. 

A similar observation may be made, concerning their implements 
of husbandry, and other utensils. They are almost entirely of 
wood, the metals entering but very sparingly into their construc- 
tion ; consequently they soon wear out, and require frequent 
renewals. A greater degree of strength in the effective desire 
of accumulation, would cause them to be constructed of materials 
requiring a greater present expenditure, but being far more durable. 
From the same cause, much land, that in other countries would 
be cultivated, lies waste. All travellers take notice of large 
tracts of land, chiefly swamps, which continue in a state of nature. 
To bring a swamp into tillage is generally a process, to complete 
which, requires several years. It must be previously drained, 
the surface long exposed to the sun, and many operations per- 
formed, before it can be made capable of bearing a crop. Though 
yielding, probably a very considerable return for the labor bestowed 
on it, that return is not made until a long time has elapsed. The 
cultivation of such land implies a greater strength of the effective 
desire of accumulation than exists in the empire. f 

The produce of the harvest is, as we have remarked, always an 
instrument of some order or another, it is a provision for future 
want, and regulated by the same laws as those to which other 
means of attaining a similar end conform. It is there chiefly rice, 
of which there are two harvests, the one in June, the other in 
October. The period then of eight months, between October 
and June, is that, for which provision is made each year, and the 
different estimate they make of to-day and this day eight months, 
will appear in the self-denial they practise now, in order to guard 
against want then. The amount of this self-denial, would seem 
to be small, ^he father Parennin, indeed, asserts, that it is their 
great deficiency in forethought and frugality in this respbct, which 
is the cause of the scarcities and famines, that frequently occur. 

* La Harp, Vol. 8. p. 289. Lettres edifiantes, Vol. X. p. 107. 

t Staunton, Vol. 2, p. 244. Ellis, p. 268 and 316; the best proof perhaps is 
in the premiums offered for their cultivation. See Lettres edifiantes, Vol. xi. 
p. 525. 


OF THE NATURE OF STOCK. 


153 


“ I believe,” he says, “ that, notwithstanding its great number of 
inhabitants, China would furnish enough of grain for all, but that 
there is not sufficient economy observed in its consumption, and 
that they employ an astonishing quantity of it in the manufacture 
of the wine of the country, and of raque.” As confirmative of 
his observations he remarks, the number of fires occasioned by 
the habit of drinking to excess before going to bed, and the 
prevalence, among the lower orders, of a malady called ye-che, 
produced by the same vice.* 

A document given in the Jesuit’s Letters, a translation from the 
Gazette of the empire in 1725, probably shows nearly what order 
instruments of this sort, and therefore of all sorts, really belong 
to ; that is, the difference between a quantity of rice, or of any 
thing else, in possession at the end of harvest, and a quantity to 
be had in spring. It proceeds on the supposition that three 
bushels at the former period are equivalent, and, in ordinary 
years, when there is neither famine nor scarcity, will produce 
four at the latter. By purchasing at the former period, and 
selling at the latter, the writer therefore estimates, that thirty 
bushels will, at the end of five years, produce more than one 
hundred. The estimate is perhaps a little high, but from the 
nature of it, of the individual from whom it comes, and those to 
whom it is addressed, it is unreasonable to suppose that it is 
much too high. Taken in conjunction with a description of a 
scheme for raising funds, of which an account is subjoined, j* it 
indicates that instruments in China are about the order D. 

The deficiency of the strength of the effective desire of ac- 
cumulation, is balanced by the smallness of the necessary cost of 
subsistence, and wages of labor, and by the great progress which 
has been made in the knowledge of the arts suited to the nature 
of the country, and the wants of its inhabitants. Where the 
returns are quick, where the instruments formed require but little 
time to bring the events for which they are formed to an issue, 

* Lettres Edifiantes, Tom. XII. p. 199. The father Parennin seems to have 
been one of the most intelligent of the Jesuits, and had the very best oppor- 
tunities for observation, having spent a long life among the Chinese of all 
classes. His testimony is much more to be depended on, concerning such a 
fact, than that of passing travellers, whose cursory observations extend only 
to what may be seen on the exterior of the habitations. 


f Note F. 
20 


154 


OF THE NATURE OF STOCK. 


even the defective principle of accumulation of the Chinese is 
able to grasp a very large compass of materials. 

The warmth of the climate, the natural fertility of the country, 
the knowledge which the inhabitants have acquired of the arts 
of agriculture, and the discovery and gradual adaptation to every 
soil of a variety of the most useful vegetable productions enable 
them very speedily to draw from almost any part of the surface, 
what is there esteemed an equivalent to much more than the 
labor bestowed in tilling and cropping it. They have commonly 
double, sometimes, treble harvests. These, when they consist 
of a grain so productive as rice, the usual crop, can scarce fail to 
yield to their skill, from almost any portion of soil that can be at 
once brought into culture, very ample returns. Accordingly 
there is no spot that labor can immediately bring under cultiva- 
tion, that is not made to yield to it. Hills, even mountains, are 
ascended and formed into terraces ; and water, in that country 
the great productive agent, is led to every part by drains, or car- 
ried up to it by the ingenious and simple hydraulic machines, 
which have been in use from time immemorial among this sin- 
gular people. They effect this the more easily from the soil, 
even in these situations, being very deep and covered with much 
vegetable mould. But what yet more than this marks the rea- 
diness with which labor is found to form the most difficult mate- 
rials into instruments, where these instruments soon bring to an 
issue the events for which they are formed, is the frequent 
occurrence on many of their lakes and waters of structures resem- 
bling the floating gardens of the Peruvians, rafts covered with 
vegetable soil and cultivated. Labor in this way draws from the 
materials on which it acts very speedy returns. Nothing can 
exceed the luxuriance of vegetation, when the quickening powers 
of a genial sun are ministered to by a rich soil, and abundant 
moisture. It is otherwise, as we have seen, in cases where the 
return, though copious, is distant. European travellers are sur- 
prised at meeting these little floating farms, by the side of swamps 
which only require draining to render them tillable. It seems 
to them strange that labor should not rather be bestowed on the 
solid earth, where its fruits might endure, than on structures that 
must decay and perish in a few years. The people they are 
among think not so much of future years as of the present time. 
The effective desire of accumulation is of very different strength 


OF THE NATURE OF STOCK. 


155 


in the one, from what it is in the other. The views of the Eu- 
ropean extend to a distant futurity, and he is surprised at the 
Chinese, condemned, through improvidence and want of sufficient 
prospective care, to incessant toil, and, as he thinks, insufferable 
wretchedness. The views of the Chinese are confined to nar- 
rower bounds, he is content, as we say, to live from day to day, 
and has learnt to conceive even a life of toil a blessing. . The 
power which the singular skill and dexterity of this people, not- 
withstanding their deficiency in the strength of that principle 
that forms the subject of this chapter, gives them, to work up 
into instruments supplying a larger circle of wants, many mate- 
rials that would otherwise lie dormant, is seen in various instances 
besides those referred to. It may be sufficient to mention 
the manufacture of silk, and the cultivation and manufacture of 
tea. They are both instances of the power of the inventive 
faculty to form instruments, soon bringing to an issue events, that 
repay, according to the rate at which labor is there repaid, con- 
siderably more than the cost of their formation. 

However we explain it, it will I think be admitted as a fact, that 
Europeans in general far exceed Asiatics both in vigor of intellect, 
and in strength of moral feeling. The average duration of human 
life is also with them more extended, and property more secure. 
These circumstances give much superior power to the accumula- 
tive principle in the one continent, to what it has in the other, 
and occasion the instruments constructed in each to be of very 
different orders, and to form a strong contrast when compared 
together. The attention of an European, when he visits Asia, is 
arrested by the slightness and want of strength, solidity, finish, 
and consequently durability, of every instrument he sees. Were 
an Asiatic city deserted, the place where it stands would, in half 
a century be scarcely discernible. The instruments constructed 
being of the more quickly returning orders, all materials which 
require much labor, and bring in only distant returns, are neg- 
lected. Mud takes the place of stone, wood of iron. In Europe, 
on the other hand, in proportion as the minds of the people are 
reflective and intelligent, and their habits moral, we find that the 
interests of futurity operate on them so largely as to occasion a 
great capacity to be given to materials, on which, in Asia, a very 
small capacity would be bestowed, or which would there be 
altogether neglected. The most stubborn morasses are drained, 


156 


OF THE NATURE OF STOCK. 


and converted into arable lands ; roads, canals, bridges, fences, 
dwelling-houses, furniture, tools, utensils, in short all instruments 
whatever indicate that the formers of them have regard to a dis- 
tant futurity, and are willing to give up for its interests a large 
portion of the means of present enjoyment. 

It is to be observed, however, that in Europe invention has in 
general made much greater progress than in Asia. Perhaps in 
their knowledge of agriculture and horticulture the Chinese equal 
most European nations, but in other arts they are far inferior, 
and, with the exception of them, no Asiatics, in the knowledge 
of these or of other arts, can compete with Europeans. On the 
other hand, the wages of labor in Europe, are far higher than in 
Asia. This circumstance, countervailing the other, would pro- 
bably, in many cases, bring the durability and efficiency of the 
instruments constructed in both continents nearly to an equality, 
were it not for the existing difference in the strength of the 
accumulative principle. 

The examples we have hitherto considered have been of 
societies, where the principle of accumulation has been either 
advancing, or, at least, not sensibly retrograding. It may be 
well to turn our attention to the effects produced by a sensible 
decrease in its strength. The history of the declining ages of 
the Roman empire furnishes us with such an one. 

Rome may be said to have carried with her, from her earliest 
germs, the elements of decay. Her power was entirely that, of 
force, a principle suppressing and subduing every thing, generating 
nothing ; like flame spreading far and wide, investing whatever it 
catches with momentary splendor, but, like it, destroying that 
which feeds it, and going out at length leaving desolation behind 
it. The proper trade of the Romans was war. But when in 
agricultural countries war becomes the occupation of a commu- 
nity, and conquest the means by which it seeks to acquire wealth 
and greatness, evils arise which time, instead of mitigating, in- 
creases. When hunters go to war with hunters, or herdsmen 
with herdsmen, the object in view, besides overcoming their 
enemies, is to obtain possession of a portion of the surface of the 
earth, and the animals wild, or tame, nourished by it. Over such 
communities therefore, though war, passing like a destroying 
tempest, leaves ruin behind, yet time obliterates all traces of the 
devastation produced by it, and the same territory sees a new 


OF THE NATURE OF STOCK. 


157 


generation arise from the victors or vanquished, as free, happy, 
and prosperous, as their forefathers. But in states of society 
where the riches of the earth are not brought out by the wild or 
tame animals which its surface nourishes, but by the husbandman 
who tills" it, there conquest can never be a permanent gain, unless 
through some permanent right acquired by it over the inhabitants 
of the territory subdued. Hence the fact of war being success- 
fully pursued as a gainful trade by any community, seems to 
imply, that the conquered submit to slavery, either personal or 
political, probably partly to both. Gain was always the ultimate 
object aimed at by the Romans. It was not to chastise an insult, 
or to protect their citizens in the undisturbed prosecution of in- 
dustry, that they fought or conquered. These might occasionally 
serve for pretexts, and were sometimes perhaps the exciting 
causes of war, but for the real fruits of victory they always looked 
to the spoliation of the vanquished, and tribute, in one shape or 
other, imposed on them. Every people with whom they came 
in contact was regarded by them first as an enemy to be subdued, 
afterwards as a province from which they were to be enriched. 
They were in truth a band of well disciplined robbers, whose 
virtue, law, religion, centered in their swords ; courageous indeed, 
and keeping to their positive engagements with a fidelity common 
to brave men, and which, as it is for their interest, even scattered 
banditti observe, but whose course of rapine was still onward, 
relentless, merciless, unchecked by thoughts of the corporeal 
pains, or mental debasement it produced. 

Such an empire could only have been formed by overpowering 
the finer and more generous and elevating feelings, and could 
not be maintained without having the effect of giving the pre- 
ponderance to the debasing, selfish, and therefore destructive 
principles of our nature. It left but one great virtue, that of 
patriotism, with the Romans a sort of enlarged esprit de corps , 
and one great moral quality, that of courage, or the meeting 
danger undauntedly when the interest of the individual or the 
state required it, — a principle of action, it may be remarked, 
differing considerably from the more generous and self-devoting 
gallantry of the modern. These were strong in Italy while Italy 
was the governing power ; but even they gradually disappeared 
as the provinces were amalgamated with it, and Italians ceased 
to be the conquering soldiery. 

It were needless to enlarge on a subject so well known as that 


158 


OF THE NATURE OF STOCK. 


of the general corruption of Roman manners, from the time of 
the first Caesar. Venality and licentiousness may be said to 
have been universal. I shall confine myself to one particular, 
as marking sufficiently the declension of those principles on 
which the strength of the effective desire of accumulation mainly 
depends. I allude to the decay of the family affections, of 
which evidence every where meets us. The men did not wish 
to be fathers, scarcely did the women wish to be mothers. The 
joys of the relation were to them too small, to be a compensa- 
tion for the sacrifices it demanded. The bringing up children 
cost the one parent too much money, and took from the other 
too much pleasure. If families were raised up, it was not from 
the natural influence of the parental affections, but in obedience 
to the laws, that the man might have the approbation of the 
magistrate, and that there might be citizens to the state. They 
lived, not in others, or for others, but for themselves, and sought 
their good in enjoyments altogether selfish. It was their aim to 
expend on their own personal pleasures whatever they possibly 
could. It would seem as if the majority, could they have fore- 
known the exact limits of their lives, would have made their 
fortunes and them terminate together. As they could not do 
so, the lives of many ended before their fortunes, as the fortunes 
of others held out beyond their lives. To reap, however, them- 
selves, while alive, all possible benefit from what they might 
chance to leave others to enjoy after their death, they encour- 
aged some of the members of a despicable class who seem to 
have constituted no inconsiderable part of Roman society. Par- 
asites ready to minister to every pleasure, and to perform every 
possible service, waited on the man of wealth, in the hope and 
expectation of enjoying a portion of it after his death. They 
were more desirable than children, both because they were able 
to give something more than mere unsubstantial affection and 
esteem, and because they were willing to give it, while a son 
or daughter might imagine they had claims to receive what they 
could not be said to have labored for. The poets and satirists 
of the Augustine age, and of subsequent times, give sufficient 
evidence of the existence of a state, evil in itself, and the fore- 
runner of many evils.* It gave occasion to the law compelling 

* Horace V. Satire II Book. It is worth while observing, that, according 
to this satire, to cheat these parasites into the service, by holding out a 


OF THE NATURE OF STOCK. 


159 

parents to leave their children a certain part, a fourth, of their 
property. Its prevalence may be judged of by the wording of 
the enactments increasing the children’s share. It is stated” as 
a fact well known, that parents generally either disinherit, or omit 
then children in their wills, leaving the bulk of their property to 
distant relations, to strangers, or to slaves, to whom they give 
freedom ; and that thus, if their family is numerous, they, w T ho 
during the lifetime of their father enjoyed affluence, find that his 
death leaves them in poverty .* 

Nothing, surely, can more clearly show the extreme and per- 
vading selfishness of the time, than its becoming necessary for 
the magistrate to compel the citizens to marry, and also to compel 
them to leave portions to their children. The existence of such 
a state of things implied a degree of isolation of feeling and ac- 
tion, so great, as necessarily to produce general weakness and 
decay. The general selfishness of the principles guiding the 
conduct of individuals, may be gathered from a prevailing pro- 
verb “ when I die let the world burn.”f When such were the 

reward they were never to get, was reckoned a thing to be laughed at. 

Probably the practice existed from a very early age, though I cannot give 
authority for it. Parasites are in Plautus’ Plays, but these are in a great 
measure translations. The following quotation from that author, however, 
expresses a feeling, which I should suppose prevailed in Roman society at the 
time : 

u Quando habeo multos cognatos, quid opus mihi sit liberis. 

Nunc bene vivo et fortunate, atque animo ut lubet, 

Mea bona med morte cognatis dicam interpartiant, 

Illi apud me edunt, me curant, visunt quid agam, ecquid velim, 

Qui mihi mittunt munera, ad prandium, ad caenam vocant.” 

* Quia plerumque parentes sine causa liberos suas exheredunt vel omittunt. 
Inst. Lib. II. Tit. 18. Capiunt quidem cognati omnia, et extranei, vel cum 
libertate servi; filii vero licet multi consistant; etiamsi nihil offenderint 
parentes, confunduntur, &c. Novel. XVIII. Pref. 

f E t uov Oavovjog yaiu fu/Orjito tcvqL Suet. A similar proverb “ a pres 
nous le deluge,” is said to have been often in the mouth of Madame Pompa- 
dour, one of the purest self-worshippers ever existing. It is perhaps worthy 
of remark, as showing the propensity of selfishness to grasp the present, that 
both the Romans and the lady were very prodigals even in what was entirely 
their own. The former it is well known rapidly exhausted their constitu- 
tions by every sort of debauchery and excess, the latter was as little econom- 
ical of her personal charms. At twenty her lips are said to have been livid 
from the too constant application of her teeth to make them pout, at thirty 
she was haggard. 


160 


OF THE NATURE OF STOCK. 


maxims ruling society, there could not fail to be a heedless sa- 
crifice of the interests of futurity, an exhaustion of the means or 
instruments which the forethought of previous generations had 
employed industry to accumulate, without any correspondent 
reformation of them. Sallust, in a fragment quoted by Mon- 
tesquieu, well describes the men of his day as a race who could 
neither themselves hold property, nor allow others to retain it.* 
Only such instruments could consequently be formed as were of 
very quickly returning orders, and, as the vigor of the accumu- 
lative principle decayed, the members of each succeeding gen- 
eration saw a mass of materials fall from their grasp, which had 
afforded a plentiful supply to the wants of their more provident 
forefathers. 

The means of supporting human life diminished, and the num- 
bers of mankind diminished with them. When vice itself did 
not sufficiently check the growth of the elements of life, it 
brought want and famine to its assistance. The history of the 
Roman world under the Caesars, is a melancholy detail of the 
gradually decaying funds of the Empire, and the gradually de- 
creasing numbers of its inhabitants. Italy, according to Pliny, 
and other writers, was in the old times crowded with people, 
thickly set with cities, and rich in all things ministering to the 
needs of its inhabitants. In his day, its diminished population 
depended for their sustenance on the productions of other ter- 
ritories. The change certainly was not owing to any alteration 
in the materials. “ Non fatigata aut effceta humus,” says Colu- 
mella. The earth would have yielded the same returns, had 
they who possessed it been willing to expend what was necessary 
to give it the capacity of yielding them. As the materials were 
only wrought up to very quickly returning orders, they had ne- 
cessarily a much smaller capacity, and the annual returns made 
by them were of consequence much less. Pasture took place 
of tillage ; corn was brought from the provinces ; and when the 
supply failed famine ensued. Even the construction of ships 
for the transport of this, and other merchandise, would seem to 
have been an effort to which the accumulative principle was 
scarcely equal. It was found necessary to encourage it by re- 

* “ Merito dicatur genitos esse, qui nec ipsi habere possent res famil- 
iares, nec alios pati.” 


OF THE NATURE OF STOCK. 


161 


warding those who prosecuted that branch of industry.* Some- 
times land formerly cultivated was allowed to lie entirely waste, 
and passed altogether out of the class of instruments. The forest 
and wilderness gained on the Romans, as they would now, for 
similar reasons, on an Indian population, were some of these 
tribes put in possession of the domains, anciently the property of 
their race, at present yielding abundantly to the provident indus- 
try of the whites. Had there been no irruption of tbe barba- 
rians the Empire must have perished, more slowly perhaps, but 
as certainly, from the operation alone of these internal causes of 
decay. They were occasioning a progressive diminution of the 
capacity which materials formerly possessed. Thus, it is to the 
Romans themselves as much as to the barbarians, that the de- 
struction of the public edifices is to be ascribed. The stones 
were applied to private purposes. With the capacity for yield- 
ing a return, there necessarily perished the return yielded, and 
the power, consequently, of maintaining the same number of 
men, and contributing an equal amount to the wants of the state. 
Hence the population of the Empire, and the imperial revenue 
diminished from age to age. 

The diminution would have been much more rapid but for 
some counteracting causes. Rome, while she conquered and 
enslaved, gave peace, and peace enabled the arts to pass from 
country to country, and often, under her protection, carried them 
to regions before barbarous. Again, she herself, as she gradually 
proceeded to enslave the rest of the world, and encircle it in 
her empire, received into her bosom those who had been free, 
or were the immediate descendants of freemen, and retained 
something of their virtues. The ungovernable licentiousness, 
extravagance, and proneness to evil of the Italians, were tempered 
by the greater decency and frugality of the new men of many 
of the distant provinces, who flocked in to recruit the diminishing 
numbers of her citizens.f 

These two circumstances, however, only retarded, they could 


* Nam et negotiatoribus certa luera proposuit, suscepto in se damno si cui 
quid per tempestates accidisset; et naves mercaturae causa fabricantibus 
magna commoda constituit, pro conditione cujusque : civibus vacationem 
legis Pappeae : Latinis jus quiritum : fceminis jus quatuor liberorum ; quae 
constituta hodie servantur. Suet, in vita Claudii, XIX. 

t Tacit. Ann. C. 55. L. III. 

21 


162 


OF THE NATURE OF STOCK. 


not resist, the advancing degeneracy, poverty, and weakness, that 
were gradually sapping the foundations of the Empire, and ex- 
posing it to be overturned by external violence, or to fall to ruin 
by its own weight. While some of her provinces gave strength 
to Rome, she corrupted them ; if she gave them her arts, she 
gave them also her manners. Like liquor, already begun to turn, 
mixed with what is yet fresh, the defects of the compound were 
not at first perceptible ; by and by, the adulteration diffused 
through it wrought on the whole, and rendered it all alike worth- 
less. 

The propagation of Christianity over the Empire is to be 
reckoned as another of the causes retarding its decay. It is to 
be observed, however, that this took place too late for reaping 
the advantages, which the morality of the Gospel might have 
otherwise conferred ; and that the corruptions of the times were 
so great as to lead its teachers rather to preach the duty of with- 
drawing from the world, than to inspire them with the hopes of 
remoulding the world to an accordance with a system of perfect 
purity of morals and benevolence of purpose. The effects of 
this cause were therefore comparatively small. 

The reader will perceive that the subject we are upon might 
be stretched to an indefinite length. Circumstances have given 
to every community a peculiar character ; the moral and intel- 
lectual powers of every people have received different degrees 
of developement, and the continuance of life is more or less 
probable, and the possession of property more or less assured, in 
one country than in another. All these particulars vary the 
relations between the present and the future, in the estimation of 
the members of different societies, and would therefore determine 
each community to stop short at some particular point in our 
series, towards which, the strength of the accumulative principle 
may be said to cause the instruments it forms continually to gravi- 
tate. Unlike the operation of gravity however, the force with 
which they tend to this point diminishes, as their distance from 
it decreases, and the farther they are removed from it, the greater 
the rapidity of their progress towards it. 

The subject would not therefore be fairly exhausted, until all 
the circumstances of the moral and intellectual state, and other 
particulars of the condition of every people, had been examined, 


OF THE NATURE OF STOCK. 


163 


and compared with the extent to which the formation of instru- 
ments among them is advanced. Enough however, has perhaps 
been done to show, that this principle is of very extensive opera- 
tion, and that in our subsequent inquiries we are warranted in 
assuming the strength of the effective desire of accumulation, to 
be a circumstance of primary importance in the determination of 
the extent to which the formation of instruments will be carried 
in any society. We should now proceed to examine the more 
important effects resulting from variations in the strength of this 
principle in different members of the same community. It is 
however necessary first to consider some phenomena produced by 
the progress of it, and of the inventive faculty, and certain classi- 
fications of instruments and names applied to them, which have 
thence arisen. This will form the subject of the next chapter. 


CHAPTER VIII. 


OF THE DIVISION OF EMPLOYMENTS AND OTHER PHENOMENA PRODUCED 
BY EFFORTS TO ACCELERATE THE EXHAUSTION OF INSTRUMENTS. 

Every individual endeavors to exhaust, as speedily as he can, 
the capacity of the instruments which he possesses. By rapidly 
exhausting the capacity of any instrument, the returns yielded 
by it are not lessened, but quickened. The powers it possesses 
to bestow enjoyment, or to aid in the formation of other instru- 
ments, are not diminished in quantity, but sooner brought into 
action, and it passes to an order of quicker return. When there- 
fore the efforts of individuals, so divided, are successful, by placing 
the instruments operated on in more quickly returning orders, 
they stimulate the accumulative principle to give greater capacity 
to instruments of the sort, and proportionally increase the capacity 
of the whole stock of instruments owned by the society. It is 
to certain phenomena, in the production of which these two cir- 
cumstances are the main agents, that w T e have in this chapter to 
direct our attention. 

As the knowledge which mankind possess of the course of 
nature advances, and they discover a greater number of means to 
provide for their future wants, the instruments they employ for 
this purpose become very various. The exercise of the arts of 
the weaver, the blacksmith, the carpenter, the farmer, implies 
the existence of a great variety of tools with which they may be 
carried on. But, as a man can only do one thing at once, if any 
man had all the tools which these several occupations require, at 
least three fourths of them would constantly lie idle and useless. 
It were clearly then better, were any society to exist where each 
man had all these tools, and alternately carried on each of these 
occupations, that the members of it should if possible divide them 
amongst them, each restricting himself to some particular em- 
ployment. There would then be no superfluous implements, 


OF THE NATURE OF STOCK. 


165 


each set of tools would form an instrument much more speedily 
exhausted, and therefore of an order of quicker return than be- 
fore. In cases where this could be done, common sense would 
point out the advantage of it. When, for instance, a man’s loom 
came to be worn out, he would go to his neighbor and say, “ I 
shall not make another loom if you will undertake to do what 
weaving I may require ; in return I will give you some of the 
produce of my farm, or will do some blacksmith work for you.” 
The offer would be accepted, and similar motives operating 
throughout the society, each individual in it would confine his 
industry, as far as possible, to the employment of some particular 
set of tools or instruments. It is not perhaps likely, that this 
was the manner in which that division of occupations with which 
we are now familiar was originally produced, but it must evidently 
have been produced in this way, had it not been otherwise 
brought to pass, as we see, in fact, that even now it is thus 
brought to pass in the progress of settlements in North America. 
In such situations, every man is at first probably obliged to be 
his own carpenter, glazier, tanner, cobbler, and perhaps to a 
certain extent his own blacksmith. As the settlement fills up, 
and the population becomes sufficiently dense, he gives up this 
multifarious industry, and takes to some particular branch. The 
advantages of the change to the whole community, and therefore 
to every individual in it, are great. In the first place, the various 
implements being in constant employment yield a better return 
for what has been laid out in procuring them ; being sooner ex- 
hausted they pass to a more quickly returning order. In con- 
sequence, their owners can afford to have them of better quality 
and more complete construction; the effective desire of accumu- 
lation carries them on to a class correspondent to its own strength. 
The result of both events is, that a larger provision is made for 
the future wants of the whole society. 

Such a revolution can only have place, where the individuals 
exercising the different employments, have a ready communication 
with each other. In situations where they cannot easily com- 
municate, either from distance, or difficulty of transit, such ex- 
changes cannot take place. If a man had to go twenty miles for 
every little piece of carpenter work that he wished executed, it were 
better for him to keep a few carpenter tools of his own. Neither 
is it likely to take place extensively unless where the accumu- 


166 


OF THE NATURE OF STOCK. 


lative principle has considerable strength, and where, consequently, 
a large amount of labor is wrought up in the several implements in 
use. Where, as in Hindostan, the loom is merely a few sticks, 
it would save one individual very little to employ another to 
weave for him. It is accordingly, in countries where the pop- 
ulation is most dense, the facility of communication greatest, and 
instruments wrought up to the more slowly returning orders, that 
employments are most divided. 

As a division of employments implies the existence of ex- 
change or barter, so, as it extends, these exchanges become ne- 
cessarily more frequent. Every man, to procure the supply of 
his various wants, has to employ the services of more individuals 
than he had before. The farmer, who used to manufacture his 
own cloth from his own fleeces, transfers these to some one else, 
and perhaps, after they have passed through the hands of the 
carder, the spinner, the weaver, the fuller, &c. part of them 1 re- 
turns to him again in the shape of cloth for some garment that 
he is in need of. In an advanced state of society, very few 
wants are supplied but by articles or instruments which have 
passed through many hands. We can scarce then fitly pursue 
our subject, without some examination of the manner in which 
these exchanges take place, and of the rules by which they are 
regulated. 

As all instruments exist solely to supply wants, so any man 
will consent to receive an instrument in exchange, or expect to 
give it in exchange, only as it is a means of supplying wants. 
It is the business of every man to adopt the readiest and easiest 
means he can devise to supply all coming needs, and it is solely 
because the medium of barter presents the readiest means of 
effecting this end, that he adopts it. 

But labor is the fund which all men have, out of which to 
supply their wants. Some have other funds besides, but every 
man has this, and strip a man of overy thing adventitious, this 
alone remains to him. It is this, then, which a person may most 
fitly be said to expend, in provision for any future want. When 
one man exchanges this for that, he may be said to give the 
labor which he has expended on this, for the labor which has 
been expended on that, and labor for labor would seem to be the 
most simple of exchanges. It never, as we shall see, exactly 
takes place, but sometimes it is nearly approximated to, and, 


OF THE NATURE OF STOCK. 


167 


that we may set out from the most simple elements, we may 
suppose that it is actually arrived at. 

Any man will be inclined to exchange one instrument for 
another, if, by so doing, he can save himself any part of the labor 
which he must otherwise expend in producing that other. A 
lives in some place where willows are to be had for cutting them ; 
he employs himself in making willow baskets, one of which he 
finishes jn two days ; B offers him a straw hat for it. If he wants 
a straw hat, and thinks that, were he to set a making one, it 
would occupy him more than two days, and moreover, that neither 
D, E or F, who make straw hats, will give it for less ; he will 
be inclined to make the exchange. In doing so, it is a matter of 
indifference to him what time B may have expended in making 
the hat, his only reason for entering into the transaction, is the 
saving of labor to himself he thereby effects. In reality, however, 
it is altogether likely that B has not expended more than two 
days in making it. For, supposing, as in this case we may, that 
both A and B have the same natural faculties, B, were he to set 
about making willow baskets, could make them as well and as 
easily as A, that is at the rate of one in two days. If then the 
straw hat cost him more than two days’ labor, he would rather 
make a willow basket for himself than exchange his straw hat for 
it. Even if he had not the manual skill necessary, he would 
apply himself to acquire it, and take to the occupation of basket- 
making in preference to that of making hats ; as we see, Jn em- 
ployments where mere labor is concerned, that one is deserted 
for another according as it gives less or more wages. 

It so -comes to pass that in the same society, in all ex- 
changes, as far as we can conceive mere labor to be concerned, 
one man, A, barters that which has cost him two, or twenty days’ 
labor, with that which has cost another, B, two, or twenty days’ 
labor. We must however bear in mind, that neither does A 
offer the article, nor does B receive it, simply because it has cost 
two, or twenty days’ labor. A offers it, and B receives it, 
because it is an instrument to supply future wants, and under the 
supposition that it cannot be got for less than two or twenty days’ 
labor. In such cases, the person desirous of making the exchange 
may indeed say to the individual with whom he wishes to ex- 
change ; Sir, I assure you the article cost me two, or twenty 
days’ labor, as the case may be ; and being assured of this, the 


168 


OF THE NATURE OF STOCK. 


person so addressed may think it sufficient grounds to make the 
exchange, and may so conclude the bargain ; but he does so, not 
because the other has expended two or twenty days’ labor on it, 
but because, he having expended this, he concludes it cannot be 
got for less. That if it has cost him two or twenty days’ work, 
it would have cost, and would cost himself, or any other, the 
same labor. If he knows that the person desirous of exchanging 
is an unskilful or bungling workman, or if he sees that the labor 
has been injudiciously applied, he will not give what is demanded. 
He knows, in that case, that he can make it, or get it made, for 
less. Were one to employ himself in rolling a stone up hill and 
down hill for a month together, he would leave it as useless to 
him in the way of exchange as before he put his hand to it. 

It may be laid down as a rule, then, that in as far as labor 
simply is concerned in all exchanges, one thing will be bartered 
for another, not in proportion to the labor that has been respec- 
tively bestowed on each, but in proportion to that which it is 
necessary to bestow on materials, similar to those of which each 
has been constructed, to make other articles equal to them in 
capacity to'supply wants. That, if this basket exchanges for that 
hat, though each may have cost two days’ labor, it is not exactly 
because each has cost it, but because neither a basket equally 
good as the one, nor a hat equally good as the other, can be 
made for less than two days’ labor. 

As a corollary from this, it follows that, whenever an article 
comes to be made with less labor than formerly, articles of the 
same sort which may have been previously manufactured, procure 
for their owners less of other articles in exchange than they did 
before. They exchange, not for what labor has been actually 
wrought up in them, but for what is now required to make others 
similar to them. Thus, supposing that a basket-maker, say in 
some settlement in North America, having to go on foot a con- 
siderable distance through woods and swamps for his willow twigs, 
requires one day to procure enough to make a basket, and that 
he takes another to work them up, he would then probably 
receive for each basket two days’ labor, or articles having cost 
two days’ labor. If now, however, a place where equally good 
willows grow is discovered near at hand, so that only half a day 
is required to get enough for a basket, and if this is generally 
known, he will no longer be able to exchange them at the same 


OF THE NATURE OF STOCK. 


169 


rate, because, as we have seen, other people would make baskets 
for less, that is, for one and a half days’ labor, or for articles in 
the fabrication of which the labor of one and a half days had been 
expended. Any stock then he might have on hand of baskets 
made previously to this discovery, would only exchange for ar- 
ticles requiring for their fabrication the labor of a day and a half. 
The same rule that applies to this trivial instance, holds good in 
affairs of greater importance, and regulates a large amount of 
exchanges. 

It can however never exactly happen, that labor will be ex- 
changed, in this simple way, for labor. The formation of every in- 
strument, besides labor, requires also the assistance of some other 
instrument. Even the basket-maker and the hat-maker, allowing 
them to get the twigs and straw they require, for the trouble of 
collecting them, would need, the one at least a knife, and the 
other a needle and thread. Auxiliaries so inconsiderable as these 
need scarce be noticed in the reckoning ; but there are cases 
where these assisting instruments may be said to do a great part, 
others, in which they may be said to do nearly the whole of the 
work. In a steam-boat the engine may be considered as the 
great laboring power, though the services of the men who supply 
fuel, and regulate the motion of it and of the boat, enter also 
largely into the account. In a set of well-contrived, and well- 
finished pipes, for conducting water through a city to the different 
houses in it, the amount of human labor entering into the process 
is very trifling. 

A weaver we shall suppose receives thread to weave into a 
piece of linen, and finishes the job in thirty days. Were he now 
in return, to receive from his employer simply thirty days’ labor, he 
would get too little. For, his loom being an instrument partially 
exhausted in fabricating the linen, this exhaustion ought to form 
an item in the account. Suppose that the effective desire of 
accumulation of the individual, is of strength sufficient to carry 
him to the order G, doubling in seven years, that the loom cost 
one hundred days’ labor, and that it will be exhausted in seven 
years ; it would then require to return two hundred days’ labor, or 
an equivalent, at the end of that period. The return however 
is not delayed so long, but begins to come in daily, immediately 
after its construction. Calculating then what yearly return is 
equal to two hundred days at the end of seven years, in the 
22 


170 


OF THE NATURE OF STOCK. 


estimation of a man who reckons one day now equal to two then, 
it will turn out to be nearly twenty days. We may allow that 
the loom is in employment three hundred days a year, it would 
therefore,. on these principles, have to return two days labor, for 
every thirty days during which it was in operation, and the 
weaver would consequently have to receive an equivalent to thirty- 
two days’ labor ; at least had he not a moral certainty of receiving 
this, he would not have formed the instrument, and were such 
return to cease he would not reconstruct it. 

The transport of goods by sea is an event brought about as 
much by the agency of instruments, as by direct human labor. 
A vessel costs, we shall say, five thousand days’ labor, and is 
exhausted in seven years, she is navigated by three men. If she 
belongs to a person whose effective desire of accumulation carries 
him only to the class G, and supposing they who navigate her to 
be paid for three hundred days’ labor, she must, on these principles, 
return about nineteen hundred days’ labor annually. Say she 
is freighted to carry a cargo of timber, and that the voyage oc- 
cupies three months. This transport is a part of the process of 
the formation of certain instruments, houses, furniture, &c. as 
necessary as any other part of it, the owner will therefore receive 
directly, or indirectly, from those engaged in their formation, an 
equivalent to not less than four hundred and seventy-five days’ 
labor. 

It is to be observed, too, that, even in cases where labor alone 
seems to be paid for, time generally also forms one of the items 
to be taken into account. Thus, an individual contracts, within 
three months, to fell the trees on a certain piece of forest 
land in a North American settlement. If then he be paid at the 
commencement of the three months, he will expect to receive 
less than if payment be deferred until the expiration of that time, 
and the difference between the two amounts will be regulated, 
as in other cases, by the particular orders to which instruments, 
in that particular situation, are generally wrought up. The same 
things hold good in all instances where labor is paid for by the 
work executed, or, as it is termed, by the piece. 

The division of employments and consequent prevalence of 
the system of exchange, occasions a particular classification of 
instruments. 

Before the division of employments takes place, the instru- 


OF THE NATURE OF STOCK. 


171 


ments which every man forms, or causes to be formed, are for 
his immediate use, and after it has taken place, the portion in- 
dividuals reserve for this purpose makes still a corisiderable part 
of the whole instruments belonging to any community. Even 
the poorest beggar has some clothes to cover him ; the opulent 
have houses, furniture, clothing, gardens, pleasure-grounds, &ic. 
This part of the whole instruments possessed by individuals or 
communities is termed a stoclc reserved for immediate consumption. 

The remainder of the general stock of instruments of individ- 
uals and of societies, with the exception of land, considered not 
as actually cultivated, but as having a capacity for being culti- 
vated, is termed capital. The instruments to which this term 
applies supply the future wants of the individuals owning them, 
indirectly, either from being themselves commodities that may 
be exchanged for articles directly suited to their needs, or by 
their capacity of producing commodities which may be so ex- 
changed. 

Capital itself is again subdivided into fixed , and circulating 
capital. Fixed capital consists of instruments which have a 
capacity for producing commodities to be exchanged, but are not 
themselves formed for the purpose of being exchanged. Cir- 
culating capital consists of commodities fitted for being exchanged, 
or of instruments in process of formation into such commodities. 

It often happens that the division between fixed and circulat- 
ing capital is drawn with difficulty, some instruments belonging 
partly to the one, and partly to the other. Thus a horse em- 
ployed for agricultural purposes is a part of fixed capital, while 
an ox may belong partly to fixed, and partly to circulating cap- 
ital, as he is reared and fed, in part for the services expected 
from him as an animal of draft, and in part for the price his carcase 
brings. 

The whole instruments owned by an individual, or a society, 
and comprehended under the terms a stock reserved for imme- 
diate consumption, fixed and circulating capital, have received 
the general appellation of stock. 

All instruments, whether comprehended under the divisions 
capital fixed and circulating, or a stock reserved for immediate 
consumption, possess a capacity for supplying the wants, or sav- 
ing the labor of man. But the wants which they supply, and 
the labor which they save, are in general not immediate, but 


172 


OF THE NATURE OF STOCK. 


future. Now we cannot estimate the same amount of labor saved, 
or wants supplied tomorrow, and five, or fifty years hence, as 
equivalent, the one to the other. Thus if we compare together 
a hundred full grown trees, and as many saplings, it may be, 
that, estimated in the supply they yield the wants of futurity, 
they are alike. If the former be cut down tomorrow they may 
yield a hundred cords fire wood, and if the latter be cut down 
fifty years hence they may yield the same. We should not 
nevertheless conceive, that they were equal the one to the other. 
What measure then are we to adopt for comparing them and 
other such instruments together, and thus finding an expression 
in a quantity of immediate labor for the whole capacity of in- 
struments possessed by any community or for the whole stock 
of that community ? The natural measure would seem to be 
the relative estimate, which the individuals concerned them- 
selves form of the present and the future, that is, the strength 
of the effective desire of accumulation of the particular com- 
munity. Thus in a community whose effective desire of ac- 
cumulation is of strength sufficient to carry it to the formation 
of instruments of the order E, doubling in five years, an in- 
strument, which at the expiration of five years yielded a re- 
turn equivalent to two days’ labor, might fairly be estimated as 
equivalent to one day’s present labor; if at the expiration of 
ten years it yielded an equivalent to four days’ labor, it might 
also now be rated at one day’s labor, and so for other periods. 
This therefore is a mode of expressing in present days’ labor the 
whole capacity of the instruments owned by any society which 
will be made use of in the following pages ; and the terms, the 
absolute stock, and absolute capital of that society, will be em- 
ployed to denote it. 

The mode however in which the fixed and circulating capital 
and stock belonging to societies, is usually estimated, is different. 
It is usual to estimate the instruments belonging to any society, 
by comparing them with one another as they actually exchange, 
some particular commodity being made choice of as the standard 
to which all other instruments are referred. To capital and stock 
estimated in this mode, the terms, the relative capital and stock 
of societies, will be applied. 

In cases where the effective desire of accumulation of a com- 
munity has had opportunity to work up the materials possessed by 


OF THE NATURE OF STOCK. 


173 


it into instruments of an order correspondent to its own strength, 
the absolute and relative stock must, it is obvious, agree ; but, in 
cases where the accumulative principle has not yet had time fully to 
operate, the former will exceed the latter. Thus, were we to sup- 
pose the returns made by the whole instruments belonging to a so- 
ciety, or their total capacity, to be suddenly doubled, without any 
addition to the labor employed in forming them, the total absolute 
stock of the society would also be doubled, while its relative 
stock would remain unaltered. The relations of the several in- 
struments possessed by it remaining the same, whatever commodity 
had been adopted as the standard, when applied to measure the 
others it would give the same results as before. It never, indeed, 
can happen that any increase to the capacity of the instruments 
forming the stock of a society, so great and sudden as we have 
supposed, can take place ; but however small such increase, it 
would have a real effect, and would occasion a difference in the 
amount of the whole stock as estimated in the one or the other 
manner. Every such increase is effected through the operation 
of the inventive faculty, and we shall therefore refer the consid- 
eration of the effects flowing from it, until we come to treat of 
the phenomena resulting from the progress of that faculty. 

Though the division of employments consequent to the pro- 
gress of science and art, and the operation of the accumulative 
principle, on the whole greatly accelerates the exhaustion of 
instruments, there are yet some particulars in which it tends 
somewhat to retard that exhaustion. In the most simple state 
of society, when art is so rude, and accumulation so little ad- 
vanced, that each individual forms almost all ihe instruments he 
himself or his family exhaust, and when, consequently, the general 
stock of the community is nearly altogether a stock formed and 
reserved for immediate consumption, it can seldom happen that 
there will be either an over abundance, or a deficiency of instru- 
ments of any sort. As each individual can make an accurate 
estimate of his own wants and those of his family, prudent men, 
in such a state of things, provide only the instruments that may 
be of use to them, and do not form any but such as they foresee 
will come into employment as they are formed. But when in- 
dividuals ceasing to form only instruments directly supplying their 
own wants, give the greater part of the industry they can com- 
mand to manufacturing commodities for the purpose of exchange. 


4 


174 


OF THE NATURE OF STOCK. 


as they have not the means of calculating with equal accuracy 
the wants of other men, it occasionally happens that some com- 
modities are produced in excess, and that there is a deficiency 
of others. 

When again the state of society is such, that each individual 
forms almost the whole instruments he requires, there is very little 
transport of commodities from place to place. The amount of 
transport necessarily increases with the separation of employments. 
This forms another drawback from the advantages arising from the 
extension of the division of occupations, and system of exchange. 
On account therefore both of many commodities being produced 
in excess, and of its being necessary to transport most from 
place to place, there are always, in such states of society, very 
many commodities lying idle, being neither under process of 
formation or exhaustion, but collected in masses at different points, 
waiting till some vacancy be found for them. The longer they 
continue in this state the farther they must pass towards the 
orders of slower return, and the more the operation of the 
accumulative principle must be retarded. 

It seems to be chiefly from the desire of obviating somewhat 
these two disadvantages attending the general advance of art and 
industry, that, when the nature of the occupation permits it, in- 
dividuals engaged in all the different divisions of industry place 
themselves as near each other as possible, and form villages and 
towns. Each can thus more easily adjust the amount of com- 
modities he produces to the wants of other men, and thus also 
there arises a great saving of transport. 

It is also in a great measure owing to the necessity of trans- 
porting commodities from place to place, and to the difficulty of 
regulating the precise amount produced consequent on the divi- 
sion of occupations, that there arises an order of men, that of 
merchants, devoting themselves solely to the business of transport 
and exchange. Merchants are the great exchangers of society, 
regulating the production of commodities, and collecting and dis- 
tributing them to situations where the never-ceasing processes of 
formation and exhaustion are producing vacancies for them. It 
is their business to make these exchanges with the greatest pos- 
sible rapidity, and least possible expense. 

There is a general average time elapsing from the period of 
the formation of every commodity, until it pass from the individ- 


OF THE NATURE OF STOCK. 


175 


ual having formed it, to the individuals who exhaust it in the 
supply of their wants, or employ it in the formation of other 
instruments. The merchant who effects the transfer of com- 
modities between the other members of society is entitled to 
receive an amount exceeding that which he gave, by the return 
which the labor embodied in the commodity exchanged should 
yield for this average time, according to the general rate of re- 
turn of capital in the community. If therefore the superior 
intelligence, penetration, and activity of any merchant, giving 
him the power of foreseeing with greater accuracy than his 
brethren where vacancies are about to exist, and what will be 
their extent, and of discovering where the commodities proper 
to fill them up may most readily be found, and most easily trans- 
ported to the requisite places, enables him to effect these trans- 
fers with greater facility than usual, and within less than the 
average time, he will receive a proportionally greater return than 
other merchants. On the contrary, if, from a deficiency in these 
qualities, any merchant attempt the transfer of commodities for 
which there is no vacancy, or effect the transfer of commodities 
for which there is a vacancy, at more than the average ex- 
pense, or in more than the average time, the returns his cap- 
ital yields him will be less than those usually received by the 
other members of the community. Mercantile energy is thus 
stimulated to effect all practicable exchanges with the greatest 
possible celerity, and at the least possible expense. The activ- 
ity which is in consequence given to the process of exchange, is 
a circumstance exceedingly beneficial to the interests of the com- 
munity. By lessening the distance between the periods of for- 
mation and exhaustion, and diminishing the expense of forma- 
tion, for transport makes a part of that expense, the successful 
exertions of the mercantile portion of society have a powerful 
tendency to preserve instruments in the more quickly returning 
orders, and to excite the action of the accumulative principle. 
Our subject consequently requires us to examine somewhat more 
particularly the mechanism by which the business of merchants 
is conducted, and the mode of calculation by which it is practi- 
cally regulated. Our attention too is more especially called to 
these, because it is from the former that the principles of the 
present science of political economy are derived, and on the 
latter that its nomenclature is founded. 


176 


OF THE NATURE OF STOCK. 


The foundation of the mechanism of mercantile transactions is 
Money. 

Gold and silver, or, as they are called, the precious metals, 
are more properly entitled to the appellation of money than any 
other thing is, because they more generally pass for money than 
does any thing else. Their beauty, their incorruptibility, and 
some other of their qualities afterwards to be considered, have, 
in almost every country, rendered them the means of affording 
much enjoyment, that is, of supplying, to a large extent, certain 
of the wants of man. It seems likely that these qualities, joined 
to the facility with which they may be transported from place 
to place, first made them esteemed the most desirable of all com- 
modities that one could possess. In the very frequent revolu- 
tions and commotions that occur in the earlier ages of society, 
articles that do not decay, can be hid, or carried off without dif- 
ficulty, and are always estimable, would naturally of all others 
be most coveted. They thus probably were first chiefly sought 
after, for the purpose of being retained, not for that of being 
exchanged ; even yet in many countries, partly from old habits, 
and partly from still prevailing insecurity, they are chiefly prized 
as of all things, those best fit to be hoarded. But, in whatever 
manner their use may have been introduced, or how much soever 
in some countries it may be dependent on a feeling of insecurity, 
at present or formerly prevailing, and prompting their possessors 
to keep not to part with them, they are now more generally sought 
for, for the purpose of being immediately passed aw’ay, forming, 
in the shape of money, the great medium of exchange, and it is 
solely in the part they thus act, that we have here very briefly 
to consider them. 

When, in the progress of society, men divide into different 
occupations, and each ceasing to fabricate himself all the instru- 
ments his wants require, barters the instruments or commodities 
he forms for those formed by others, the system of exchange, as 
we have seen, commences. The introduction, to a greater or 
less extent, of some sort of money, seems naturally to follow. 
For when a man forms only one sort of instruments or commod- 
ities, it cannot at all times happen that he can exchange them 
with articles fabricated by other men, and necessary to supply 
his wants, because these other men, the formers and possessors 
of what he desires, may not at the moment have occasion for 
what he has formed. “ The butcher has more meat in his shop 


OF THE NATURE OF STOCK. 


177 


than he himself can consume, and the brewer and the baker 
would each of them be willing to purchase a part of it. But 
they have nothing to offer in exchange, except the particular 
productions of their respective trades, and the butcher is already 
provided with all the bread and beer which he has immediate 
occasion for.”* There are two modes by which the desired ex- 
change may be effected. If the brewer and the baker have a 
commodity received by every one for all others, such as money 

is, they may each give the butcher a certain quantity of it for a 
quantity of meat, and when he requires their ale and bread, he 
may, in turn, send back to them also a quantity of money. Or, 
the butcher may be satisfied with the promise of the brewer and 
the baker, that, at some future time, when he has occasion for 

it, they will give him a quantity of ale and bread, or of some- 
thing else. These two modes of effecting the object form the 
two systems of cash, or credit, by which all the business of every 
country that consists not in barter, is carried on. 

Pieces of gold and silver coined, that is stamped with a mark 
regulating and assuring by the authority of the magistrate the 
weight and fineness of each, enter largely into transactions of 
the former order ; they make the bulk of the current coin of most 
countries. Supposing the whole of the exchanges of any coun- 
try that are not simple barter, effected by money, and that gold 
and silver form the sole money, then the amount of them so 
employed would seem to be regulated by two circumstances. 

1st. By the quantity of commodities that may exist to be ex- 
changed. This again must depend on the quantity of materials 
wrought up into instruments, and on the progress of the division 
of labor. As the number of instruments increase, and as from 
their first commencing formation, until they are exhausted, they 
pass through more hands, the amount of exchanges must in- 
crease. As the number of instruments formed decreases, and as 
every man himself constructs a greater proportion of those ne- 
cessary to supply his own wants, the amount of exchanges must 
diminish, and as the amount of exchanges increases, or dimin- 
ishes, so must there be required a greater or less quantity of the 
medium through which they are transacted. 

In such a state of things as we suppose, could every man see 

* Wealth of Nations, Book I. c. IV. 

23 


178 


OF THE NATURE OF STOCK. 


exactly beforehand the whole series of the exchanges that would 
present themselves to him, every prudent man would so manage 
his exchanges, his purchases that is, and his sales, as to provide 
himself with the exact amount of money necessary to effect 
every exchange that he might deem it advisable to execute. 
But no man can with accuracy foresee what transactions may 
-present themselves to him, or when they may do so. The 
amount of possible future exchanges that may offer to any man, 
and the time they may occur, are exceedingly uncertain, depend- 
ing on many things not to be foreknown, the operations of other 
individuals engaged in the formation of instruments, immediately, 
or remotely connected with those on which his means or industry 
is engaged, the course of the winds and seasons, the fortune of 
war, the progress of treaties, and numberless other events equally 
doubtful in their issues. Every man, therefore, would in such a 
state of things, suffer two inconveniences, he would occasionally 
have too much money, and occasionally too little. He would 
sometimes have a sum lying for a long time useless by him, and 
an advantageous purchase would sometimes present itself to him 
which he had not cash sufficient to effect. Between these two 
opposite evils, it would be his business to steer as safe a course 
as possible ; he could not hope altogether to avoid them, but 
must be content to suffer occasionally from both. Which of the 
two it would be most prudent for him to run the risk of suffering 
from, would, I conceive, depend on another circumstance, form- 
ing the second of those that, under the suppositions we have 
made, regulate the amount of precious metals in circulation. 

Every man must be more unwilling to run the risk of having 
a sum of money lying useless by him, by how much greater the 
amount of the returns he could have by turning it to the forma- 
tion of instruments. If then, in the society of which any man 
is a member, instruments are not far removed from the first orders 
of our series, when they soonest double the expenditure of their 
formation, he will rather risk the inconvenience of having too 
little money by him, than the loss of having a sum in his coffers 
long unemployed, which might have been converted into instru- 
ments yielding large returns. But if, in the society of which he 
is a member, instruments are far removed from the first orders of 
our series, he will be disposed to reserve a greater amount in 
the hopes of making more by some advantageous bargain, than 
he could by expending it on the formation of any instrument. 


OF THE NATURE OF STOCK. 


179 


We should expect then to find, that, in countries where either the 
principle of accumulation is too weak to carry instruments on to 
the more slowly returning orders, or where it has not yet had 
time to do so, money would be scarce, and that, where this prin- 
ciple having had time to act, its strength has carried them to the 
farther orders, there money would be plenty. Such will be 
found to be the fact. In China, gold and silver are rarely seen, 
in the interior traffic of the country ; in Holland, they have 
always abounded. In new settlements in America, where from 
the superabundance of materials, instruments are of very quickly 
returning orders, the amount of coin to be found is exceedingly 
small. When a man there has cash in his pocket, he finds so 
many things that he could with profit expend it on, that he can 
scarcely refrain from doing so. 

An European visiting some parts of Upper Canada, is sur- 
prised, when he comes to discover, that a few dollars is all the 
cash that even men comparatively rich may have lying by them. 
He is apt to conceive that they are poor men, and to describe 
the country as a poor country. In doing so, however, he does 
not make a correct use of words. He sees, for instance, a man 
who, ten years before, may have brought a sum of two hundred 
pounds to the place where he is now settled, without at present 
twenty dollars in his pocket, and who perhaps, were that sum sud- 
denly demanded of him, might have difficulty to procure it. In 
one sense, then, the man is poor. But, were this man asked to 
sell his farm and his other property, he probably would not give 
it for less than a thousand pounds, and he might get this sum 
for it. If so, it is ten to one that he would lay out the greater 
part of it in the purchase of a larger quantity of land than he 
before possessed, and the remainder in improving that land, so 
that a year or two would see him just as bare of cash as before, 
and twelve years afterwards, if he went on prosperously, he 
would still have but a trifle of ready cash, though perhaps he 
might truly consider his property worth two or three thousand 
pounds, and might not be disposed to take less for it. He could 
hardly therefore be called a poor man. In this part of America, 
as formerly over the whole of it, “ the scarcity of gold and silver 
money is not the effect of the poverty of that country, or of the 
inability of the people there to purchase those metals. The 
scarcity of these metals is the effect of choice and not of neces- 


180 


OF THE NATURE OF STOCK. 


sity. It is convenient for the Americans, who can always em- 
ploy with profit, in the improvement of their lands, a greater 
stock than they can easily get, to save as much as possible the 
expense of so costly an instrument as gold and silver ; and rather 
to employ that part of their surplus produce which would be 
necessary for purchasing those metals, in purchasing the instru- 
ments of trade, the materials of clothing, several parts of house- 
hold furniture, and the iron work necessary for building and ex- 
tending their settlements, in purchasing, not dead stock, but 
active and productive stock.”* 

But, though the loss of having more idle cash lying by one, 
than can possibly be dispensed with, must be felt most sensibly 
where such cash can be most profitably expended, where instru- 
ments, that is, are not far from the first orders of our series, still 
it must always be felt. A man will never keep two hundred 
pounds in his chest, if he thinks it probable that one hundred 
will be sufficient, because he can always make something of the 
other hundred. Although however, men, in such cases, must be 
governed by what they think probably will happen, yet, as no 
man can foresee with certainty what may happen, every man 
will now and then be wrong in his calculations, and therefore, 
under the suppositions we have made, every man would occa- 
sionally suffer from having too little cash, as well as at other 
times from having too much. 

The effect of both these sorts of losses must be, to place the 
instruments on which they operate in orders of slower return, 
than they would otherwise occupy. One wishes to purchase a 
pair of young horses of a particular sort ; for this purpose he 
reserves a quantity of coin equivalent to four hundred days’ labor ; 
he happens, however, not to meet with a pair that suits him for 
the space of six months, when he purchases two, giving for them 
the amount he had anticipated. It is evident, in this case, that 
they have really cost him, not only the four hundred days’ labor, 
but all that in the country in which he lives, that labor would 
have produced, besides paying for itself, during the six months 
he was looking out for the bargain. Now, as this additional 
outlay cannot add to the capacity of these instruments, to the 
strength, swiftness, beauty, and health, that is, of the animals, 
nor diminish their age, it must be esteemed as lessening the pro- 


Wealth of Nations, Book V. c. III. 


OF THE NATURE OF STOCK. 


181 


portion between the return to be got from them, and the outlay 
expended on them, and must move them proportionally towards 
the orders of slower return. Again, it may have been that the 
person who at last sold the horses, may have been desirous of 
selling them for six months before he effected the sale, and that 
at the commencement of that period he may have met with an 
individual who would have purchased them, but not having an- 
ticipated the occurrence of so favorable an offer, happened not 
then to have the necessary cash. If we suppose them to have 
been merely useless to their owner during the period from thence 
elapsed, the service they rendered him being just sufficient to 
pay for their food and keep, still, this retardation in the return 
from the outlay in the formation of them as an instrument, also 
moves them so much towards the more slowly returning orders, 
and diminishes the activity of the accumulative principle. If 
the individual who raised them does not receive an additional 
price, proportionate to the delay, the occurrence will have a 
tendency to make him give up this branch of business. 

Similar events taking place in the exchange of other instru- 
ments, would produce similar results, and therefore two evils 
would necessarily accompany the state of affairs we have sup- 
posed. There would be two drawbacks on the progress of the 
industry of the society, the one consisting in the expense of the 
circulating medium, the other in the loss arising from a deficiency 
in it. The two together would be in proportion to the amount 
of exchanges which the progress of knowledge, the strength of 
the principle of accumulation, and the quality of the materials 
within reach of the society caused to be transacted. The evil 
directly arising from them would be the consequent retardation 
of the returns from the industry of the society, an evil equiva- 
lent to a proportional diminution of these, and placing them in 
more slowly returning orders. The evil indirectly arising from 
them would be the keeping a greater or less extent of materials, 
without reach of the strength of the accumulative principle of 
the society, and the consequent nonforrriation, to a greater or less 
extent, of instruments that would otherwise have been formed. 

The proportion between the two would be determined by the 
order to which the strength of the effective desire of accumula- 
tion, and the time which it had had to operate, had carried the 
formation of instruments. 


182 


OF THE NATURE OF STOCK. 


But the state of things we have supposed never exists. It 
scarcely happens, even to return to the sort of transactions we 
set out from, that a butcher, a brewer, a baker, dealing together, 
effect all their business either by direct barter, or by cash. The 
butcher would, in very many cases, be satisfied with the implied 
promise of the brewer and the baker, that, at some future time, 
they will give him a quantity of the commodities they respect- 
ively deal in, or of money, or some equivalent to it, equal to the 
price of the beef each received. 

This mode of effecting the object, constitutes the system of 
credit, the second of the two systems by which exchanges are 
carried on. It has an existence in every country, and in most 
civilized countries, as is well known, the great bulk of transac- 
tions are carried on by the aid of it. Were the actual or implied 
promise, which the party receiving the commodity makes to 
him giving it, always fulfilled, it would in itself be unattended 
with any loss, and might possibly be so managed as almost 
entirely to supersede the use of coined money as a medium of 
exchange. 

The amount of the whole purchases made by any individual 
within a limited time, is, in general, about equal to the sales he 
effects within the same time. If, therefore, in any community, 
all the exchanges, which are not direct barter, were to be trans- 
acted by credit, and were the obligations to pay granted by all 
persons engaged in business in it to expire at the same time, 
when that time came round, every individual would hold obliga- 
tions to receive, to about as large an amount as he had granted 
to pay. If th6n each individual had granted obligations to pay, 
to the same persons as he had received others from, the business 
would be at once concluded by a reciprocal delivery of obliga- 
tions. But this can scarcely ever happen ; almost all the obli- 
gations to receive payment, which any individual holds, will be 
from other persons than those to whom he himself has granted 
obligations. The affair might however be managed, and the 
same end arrived at, by a transfer of obligations from hand to 
band. A has bound himself to pay B fifty pounds, B to pay C 
fifty pounds, and C to pay A fifty pounds. If, then, A pay B, 
by giving him C’s obligation, B can discharge his debt to C with 
it, and thus the debts and credits of the whole three be settled. 
By operations more complicated, but conducted on similar prin- 


OF THE NATURE OF STOCK. 


183 


ciples, nearly the whole system of exchanges of any community 
might be managed. 

There are two obstacles to this mode of effecting exchanges 
by credit. The first arising from its inherent complexedness and 
difficulty, the second from the liability of the contracting parties 
to fail in fulfilling their engagements, from dishonesty, miscal- 
culation, and accidents impossible to be foreseen. These restrict 
its application in general to transactions for large amounts, little 
doubtful in thetnselves, and which from their nature can be easily 
systematized and arranged. Such appears to have been the 
viremens, or transfers, at Lyon.* Such also are the transfers 
effected by the London bankers. In Russia, however, it would 
seem to be applied to transactions much more various, and com- 
plicated. Mr. Storch informs us that the creditors and debtors 
of the province of Kief, and several others adjoining, the pro- 
prietors, capitalists, merchants, those who want funds, and those 
who want to dispose of them, meet in the month of January, in 
the town of Kief, to make such transfers, and that in 1804, the 
amount of their exchanges was upwards of twenty millions of 
rubles, or about three millions seven hundred thousand pounds 
sterling. Transfers similar to these are made, he adds, at Reval, 
and many other towns in the empire.f 

There is another method by which the system of credits might 
be conducted, and which may be illustrated by an example taken 
from a country already referred to, where the causes exciting to 
its introduction, and giving prevalence to it, operate very power- 
fully. In many parts of North America, but more especially in 
new settlements in Upper Canada, the scarcity of cash, and 
perhaps other circumstances, often lead traders to adopt a peculiar 
plan of business. Every dealer provides himself with a general 
assortment of all sorts of commodities in demand in the settle- 
ment he inhabits, and reckons on being paid for them in the 
shape of grain, potash, pork, beef, and other commodities, in the 
formation of which his customers are engaged. But in this sort 
of barter, one article will generally fall short or exceed the value 
of the other, a pound of tea will not exchange for a hog, nor a 
quarter of wheat for a dozen pounds of sugar. To obviate the 


* Ganilh Des systemes d’economie politique, Tome II. p. 155. 
t Storch Cours d’economie Tome II. p. 353. 


184 


OF THE NATURE OF STOCK. 


difficulty, the merchant opens an account with each of his cus- 
tomers, charging him with the goods furnished, and giving him 
credit for the produce received, and in this way perhaps all the 
transactions between the two are managed, either by barter or 
credit, without the assistance of a dollar of cash. Nor is this 
all, a great variety of other transactions are also effected, through 
his intervention. Any person who may have furnished him with 
an overplus of produce, or who has credit with him, can through 
his means settle most accounts or balances due on accounts. He 
may thus pay the laborers, and the artificers, and tradesmen, he 
may employ, by an order on the shop, or as it is called, store, of 
the country dealer. Besides these, the transactions of the store- 
keeper extend to the giving out of the raw produce of the coun- 
try, to individuals in the settlement, tradesmen, &c. who may 
not themselves have enough, and to the receipt in return of 
various articles, such as axes, shoes, boots, made-up clothes ; 
and in this way through his books, a very large portion of the 
'business of the settlement is transacted. It is not difficult to 
conceive, that the whole might be so transacted. 

Were the country dealer always to have a supply of every 
article in demand in the settlement, at a reasonable rate, and 
were all contracts for the delivery of produce to him to be regu- 
larly executed, almost all the requisite exchanges might be con- 
veniently effected through his books. But in this sort of traffic, 
as the merchant always has commodities to sell, and his custom- 
ers have not always produce to return, it inevitably happens that 
they get into his debt. As his object is to sell as many goods 
as possible, he is very apt to allow many to run in his debt, who 
do not fulfil their engagements. He suffers from the dishonesty, 
or the imprudence and miscalculations of those who deal with 
him. Very many of his customers are much longer of paying 
him than they have promised, or they do not pay at all. Aware 
of the risk he runs, he is obliged to balance it by charging an 
additional sum, over and above what he would otherwise demand, 
on all commodities that pass through his hands. In some cases, 
this advance amounts to at least 30 per cent. In this way he 
makes, or endeavors to make, the prudent and honest persons 
who deal with him, pay for the imprudent and dishonest, who 
also deal with him. The former class, in consequence, keep out 
of the circle of all such transactions, as much as possible, and 
store-pay, as it is called, is depreciated. 


OF THE NATURE OF STOCK. 


185 


The business of banking, seems to owe its foundation and ex- 
tension, to its capacity for giving room for the developement of 
the benefits, and for restraining and remedying the evils of the 
system of credit. The operations which the banker executes in 
a great society, have more than the advantages of those performed 
by the system of viremens in France, or Russia, and by the 
petty store-keeper in a remote American settlement, and avoid 
many of the inconveniences of both. He is the instrument, 
through which the mass of the exchanges, taking place in the com- 
munity, is performed. It is his business to furnish the means of 
transacting all exchanges that the condition of the society re- 
quires, and it is the business of all individuals having many such 
exchanges to effect, to make application to him for the means of 
transacting them. 

In a great society, a person extensively engaged in business, 
may, in a short time, have transactions with twenty, thirty, or a 
hundred individuals ; his circumstances can be known but to a 
few of them, nor is it possible for him to produce to each satis- 
factory evidence of his own capacity to discharge his engage- 
ments, or to give him the security of others for their performance, 
and even could he do this, it w T ould be insufficient for the pur- 
poses of the greater part of them. If such a person, however, 
really possessed funds in trade and manufacture, if he really 
owned a stock of instruments requiring a constant change and 
transfer with those in the hands of others, he might find means 
to satisfy one individual, the banker, of his capacity to execute 
these exchanges in reasonable time, or procure others to be 
responsible for his doing it. It is then the business of the banker 
to give him the means of doing so, and he accordingly lends him 
money when he requires to add to his stock of instruments, that 
is to buy, and receives money from him again, when he transfers 
instruments to others, that is, when he effects sales. Every person 
engaged in business doing the same, the banker is the general 
lender, and receiver of the society. 

The mechanism of banking is managed in two ways. The 
one is by discounting bills, that is by giving money immediately, 
for the obligations by which one man contracts to pay money to 
another, at some future time, deducting a part, the proportion of 
which is determined by the order in which instruments stand in 
the society, and by the length of the period. This method is 
24 


186 


OF THE NATURE OF STOCK. 


analogous to that of viremens, but far preferable. Thus, an in- 
dividual who holds an obligation by which another binds himself 
to pay him the sum of two thousand pounds in six months, were 
he in some parts of Russia, would be justifiable, were he confi- 
dent of the solvency of his debtor, to contract obligations to that 
amount, and payable at the Same time. Were he then desirous 
of having something transferred to him, of the value of two thou- 
sand pounds, his granting an obligation to that amount, and payable 
at six months, might help to make the two transactions of easy 
arrangement. But, supposing that he were desirous of having a 
number of small transfers made to him, that he were to grant a 
proportional number of obligations, that the persons to whom he 
granted them were again to grant others, still smaller and more 
numerous, and that these were again to be subdivided and re- 
united, it is evident that the mass of affairs, would become so 
complicated, and the number of individuals concerned in them 
so large, that the trouble of arranging them would be excessive. 
This system is of consequence, as has been already observed, 
of limited application. But when an individual gets a bill dis- 
counted, the transfers he effects with the bank bills he receives, 
occasion no future trouble to himself or others. 

The system of bank credits is the second mode, in which the 
business of banking is managed. It is somewhat analogous to 
that carried on, through the aid of the books of the North Amer- 
ican store-keeper. The banker gives the means of effecting 
any purchases which those dealing with him are desirous of 
making, and, when they sell, gives them immediate credit for the 
amount they receive. He is not, however, like the store-keeper, 
urged on, by the dread of a stock of goods lying on his hands 
too long, to allow people to run accounts with him, whose credit 
is in any means doubtful. He is a dealer simply in credit, and 
it is his business, before giving credit, to demand such security as 
may satisfy him that he can sustain no loss, and this being grant- 
ed, to afford the requisite accommodation on reasonable terms. 

The advantages which the banker derives from being the gen- 
eral lender of the community, arise chiefly, from the peculiar 
sort of money he lends. It is not specie, but merely an obliga- 
tion to pay in specie. But as all who engage in business have 
to return cash to him, it is equally good to them as specie, and 
through them is equally well received among the other mem- 


OF THE NATURE OF STOCK. 


187 


bers of the community. Thus the money of the banker comes 
to make a great part, or nearly the whole, of the circulating 
medium. 

The benefits which the society receives from the system, 
when there are no defects in the conduct of it, seem to be three- 
fold. 

1st. As far as it extends, the expense of the circulating me- 
dium, the expensp which men in business must otherwise be 
put to by being obliged to have a quantity of cash always lying 
by them to meet sudden emergencies, is done away with. When 
a man wants cash, he goes to the bank for it, when he has cash, 
he carries it to the bank. Money never lies idle. 

2d. It does away with all deficiency in the circulating medium. 
When the system of instruments which belong to an individual, 
is defective in any part, he can at once supply the defect, and 
when it is redundant, he has no difficulty in disposing of the 
superfluity where it may be usefully employed. 

3d. It does both, without the evils otherwise attendant, on the 
substitution of credit for coin. The dealings of men of prudence 
and character, are not so mixed up with those of improvident 
and suspicious persons, as to make the one bear the burden of 
the losses sustained through the folly or dishonesty of the other. 
Every instrument, as its formation is pushed on by the industry 
of the members of the society, is moved directly to its proper 
station. It neither runs the risk of being subjected to remain 
useless, owing to the expense of moving it, nor of being mis- 
placed or destroyed in the process of moving it. 

The tendency of these three effects, flowing from the banking 
system properly conducted, is to carry the instruments subject to 
the operation of exchange, to orders of more quick return, than 
they would otherwise have occupied. The outlay expended on 
them is not so great, and they sooner make the expected returns. 
The accumulative principle receives in consequence, a stimulus, 
that enables it to embrace a larger compass of instruments, and 
the general stock of the society is soon proportionally increased. 
Greater facility is also given to the division of employments, 
from there being no obstruction to the additional exchanges re- 
quired, and new branches of business arise. From both these 
circumstances, the number and amount of exchanges increase. 

The money of the banker, compared with gold and silver, as 


188 


OF THE NATURE OF STOCK. 


a medium of exchange, would thus seem to be not only less ex- 
pensive, but more efficient. When the circulating medium in 
any country is specie, probably far the larger portion of it lies 
idle. Every merchant, in such a country, has a quantity of gold 
or silver, proportioned in amount to the business he carries on, 
doing actually nothing, but only waiting to do whatever may 
offer. The strong boxes of all the merchants in the country, 
always hold, therefore, a large portion of its capital in inactivity. 
In a country, on the other hand, where the bills of the banker 
form the circulating medium, the quantity of money lying for 
any time idle is insignificant. No money is retained, but for a 
specific purpose. In Scotland, for example, every merchant 
places in the hands of the banker, all the cash for which he has 
not immediate use. 

Were we, therefore, to confine the advantages derived from 
the institution of banks, in any community, to the substitution of 
a cheap medium, for a dear one, we should make an imperfect 
estimate of them. If, for instance, the circulating medium in 
any country be one million in coin, and if that be superseded by 
paper, should the quantity of paper in circulation be found to 
amount also-, to one million, it would indicate a great increase in 
the transfers effected, and would show, either that a larger com- 
pass of materials had been brought within reach of the accumu- 
lative principle, or that employments had been more subdivided, 
or that both these circumstances had occurred. 

F rom the same causes, the effects of a recurrence to a metallic 
currency, and the compulsory substitution of one million of 
specie, for one of paper, would be far from being limited to the 
expense of the bullion employed in the operation. It would, 
besides this, render impracticable a multitude of transfers, that 
might otherwise have taken place, disorganize the whole system 
of exchange, place the stock of the society in orders of slower 
return, and put a mass of materials, which the accumulative 
principle had before been able to grasp, beyond its reach. 

The extent to which the banking system may, in any country 
be carried, seems to depend on four circumstances. 

1st. The amount of the science, skill, and population existing 
in the country, to work up the materials it affords, and the 
abundance of these materials. 

2d. The strength of the accumulative principle, the oppor- 


OF THE NATURE OF STOCK. 


189 


tunity it has had to operate, and consequent division of employ- 
ments, approach of instruments to the more slowly returning 
orders, and accumulation of stock. These two circumstances 
determine the amount of the possible exchanges, and, conse- 
quently, of the money that may be employed in effecting them. 

3d. The general intelligence, sagacity, and integrity of the mem- 
bers of the community. A person greatly deficient in any of these 
respects, is one with whom a banker would not wish to deal. But, 
these qualities are of those giving strength to the effective desire of 
accumulation ; this circumstance, therefore, may be considered 
as merging in the last, the general strength of the accumulative 
principle. 

4th. The efficiency and security of the system of banking 
adopted. 

On the other hand, the benefits to be derived from banking, 
in proportion to its extent, would seem to be greater, the nearer 
instruments are to the more quickly returning orders, and the 
greater consequently the scarcity of specie. Where, therefore, 
the accumulative principle being strong, and from the implied 
intelligence, and honesty of the community, the system of bank- 
ing extensively practicable, but from want of time to work up 
materials to more slowly returning orders, instruments are at those 
of quicker return, there the operations of the banker are pecu- 
liarly beneficial. 

We have, perhaps, sufficiently enlarged already, on the three 
first of the circumstances referred to. It only remains, to show the 
chief points of connexion of the last of them, with the princi- 
ples it has been attempted to explain. To do so, it is necessary 
to refer to the occasional evils resulting from the system of bank- 
ing, diminishing its general utility. They may be reduced to 
two. 

1st. The money which bankers circulate, must be the repre- 
sentative of real property. It must be exchangeable for some 
commodity, or commodities, equal to the amount at which it is 
rated. If it may be always exchanged for specie, or for some 
proportion of the general revenue abstracted for the purposes of 
government, it will be a representative of something real. But 
it sometimes happens that bankers squander, or waste, the funds 
provided for payment of the demands to which they are liable, 
and this being discovered, their money becomes valueless, and those 


190 


OF THE NATURE OF STOCK. 


holding it as an equivalent to capital, sustain loss to the amount 
they hold. The loss thus sustained, both in itself, and in the 
general diminution of confidence in banking transactions and re- 
tardation of exchanges consequent on it, makes it a matter of 
great importance to every mercantile community, to have banks 
of indubitable solvency established throughout it. It were be- 
yond the present purpose, to inquire into the particular system and 
regulations that may best produce such a result. There are, 
however, two general observations, arising from the nature of 
things, which naturally present themselves. 

When capital is largely accumulated, and at orders of slow 
return, there will be very many, who will be disposed to allow 
their funds to remain in that employment, and be content with 
the moderate revenue thus produced to them. When, on the 
other hand, they are at orders of quicker return, there is a great 
temptation to divert the fund, set apart for these purposes, to 
speculations promising great gain, but sometimes producing great 
loss. Banking will consequently be in general safest, where 
capital is most largely accumulated. 

Again, as no possible precaution can prevent a company of 
bankers from acting dishonestly, who are willing to combine for 
such a purpose, for they can only be required to produce state- 
ments drawn up by themselves, where there exists a great defi- 
ciency of real principle, and a proneness to defraud, banking 
becomes dangerous or impracticable. 

2d. The second evil arising from the practice of banking, 
has its origin, in the system of credit itself; and the shock which, 
as it is founded on prevailing opinion, it is liable to receive from 
whatever shakes public confidence. 

Every person engaged in the formation and transfer of com- 
modities, and adopting the system of credit as the medium of 
transfer, is indebted to some individuals, as, in turn, other indi- 
viduals are indebted to him. The stock also of instruments he 
has on hand, allows him to offer a certain amount of commodities 
for sale, and requires him, if he continue his business on the 
same footing, to purchase certain other commodities, and pay for 
certain amounts of labor. What is owing him, and payable 
within a given time, may exceed what he owes others, payable 
within the same time, or may equal it, or come short of it. 
What he is able to sell others within a given time, may also ex- 


OF THE NATURE OF STOCK. 


191 


ceed what he requires to buy within the same time, or may be 
equal to, or less than it. It will always be the case, too, that 
individuals will look forward for the means of discharging the 
debts they have contracted, not only to the debts owing them 
by others, but to the sales they expect to effect. Were this 
to happen only to persons of really abundant capital, there would 
be no reason to fear the non-performance of engagements con- 
tracted. But it also happens to those, whose capitals have been 
reduced by misfortune or imprudence, and therefore, there 
are always many in every mercantile community, whose ability 
to discharge their obligations is more or less doubtful. When, 
therefore, any cause operating extensively, and prejudicially, 
on mercantile transactions occurs, it generally happens, that there 
arise cases of incapacity to meet engagements, and, as one 
man depends for the means of discharging his debts, on the 
debts others owe him, that embarrassment and distress spread 
throughout the whole mercantile body. The experience of the 
misfortunes attending this state of things, leads every one en- 
gaged in business, when he thinks there is reason to fear its 
approach, to endeavor to withdraw himself from the danger, by 
avoiding to contract obligations to pay. There is consequently 
a general diminution of purchases, and a general temporary fall 
in prices.* 

But while prudent people are thus able to secure themselves 
from evil, they increase the difficulties of those, who have con- 
tracted obligations to pay, in dependence on the proceeds of sales 
to be effected ; and some of these becoming incapable of ob- 
taining the means of meeting their engagements, their failure 
increases the general distress, and farther lessens the number in- 
clined to purchase. 

At this conjuncture, the affairs of the banker undergo a revo- 
lution. For, as the number of buyers diminishes, there is less 
money requisite for transacting the business of the community, 
and this overplus naturally returns on him. But while less money 

* Market price, which is fluctuating, is here spoken of. What is termed 
the natural price of things, or their general average price, is that alone treated 
of in other parts of this inquiry, it being only the permanent causes affecting 
the increase and diminution of stock, that it was proposed to investigate. 
On this account, the view here given of phenomena resulting in a great 
measure from the operation of temporary causes, i3 somewhat confined and 
imperfect. 


192 


OF THE NATURE OF STOCK. 


is really wanted to execute the business of the society, he is 
called on to furnish as much, or probably more. The debts those 
dealing with him formerly contracted have to be paid, while the 
sales of commodities, the means by which it was anticipated that 
part of the funds for that payment, would be procured, have 
much diminished. 

The situation of the banker becomes therefore at this crisis, 
very critical. He cannot, in justice to himself, grant all the re- 
quisite accommodation, and yet, his refraining from doing so must 
aggravate existing evils. As specie is, in such a state of things, 
the most desirable of commodities, he has reason to fear that a 
large portion of his money will be returned on him, which he will 
be required to replace with gold or silver, and he knows that if 
a suspicion of his solvency arise, he may be required thus to 
replace the whole of it. If he be unable to meet these diffi- 
culties, his failure adds very much to the general mass of misfor- 
tune, and farther diminishes public confidence. 

The natural termination to such a state of things, would seem 
to be the diminution of contracts, and consequently of debts, 
progressively diminishing the amount of payments, for which it 
is necessary to provide. This termination is retarded by the 
struggles of those whose real funds, in proportion to the extent 
of their business, are smallest, and whose motives to engage in 
fresh transactions, are chiefly the hopes of extricating themselves 
from the embarrassments in which present transactions have in- 
volved them. It is also more injuriously retarded, as has been 
observed, by the failure of those engaged in the business of 
banking. 

The liability of the mercantile community to be largely affect- 
ed by such sudden pressures, must depend, in a great degree, on 
the peculiar circumstances of the country, and nature of the 
employments and trades carried on in it. 

It must also be dependent on the system of banking, that is 
there pursued, and its capacity to furnish funds where there is 
real capital ; to check unsafe and gambling transactions by with- 
holding funds from those desirous of extending hazardous specu- 
lations, though deficient in capital ; and to pursue its operations 
steadily and confidently notwithstanding any general embarrass- 
ment. To attempt, however, an enumeration and comparison 
of the different systems of transacting the business of banking, 


OF THE NATURE OF STOCK. 


193 


which have been adopted in different times and places, would 
involve us in inquiries of so complicated a nature, that while to 
discuss them partially would be unsatisfactory, to do so fully 
would lead too far from our present object. I reserve therefore 
the few observations I have to make on the subject, to another 
place.* 

Gold and silver would thus seem to have been considered, 
first, simply as themselves the most precious, and easily preserv- 
ed of all articles ; next, their capacity for being divided and 
re-united without injury, would seem to have led to their general 
employment in exchange for other things the acquisition of 
which their possessors found useful or necessary ;f convenience 
then to have rendered it expedient to have them formed into 
pieces of a certain weight, and fineness, when they began to con- 
stitute what is now called money ; lastly, their general adoption as 
money would seem naturally to have rendere t d them proper 
measures to give fixedness to those obligations to future delivery 
of things in exchange, which the increased security and tranquil- 
lity of modern times, and the great amount of exchanges trans- 
acted, have in recent days, introduced. In the twx> latter em- * 
ployments, as serving for real, or determining the rights which 
the possession of fictitious money conveys, they occasionally 
serve as media for exchanging all instruments, and, therefore, 
for determining and expressing their relation to each other, as 
things capable of being exchanged. In this way measuring all 
things exchanged, or capable of being exchanged, that is, all in- 
struments, they come to denote the amount of instruments, or 
capital, or stock, which any man possesses. A person is said to 
be worth five hundred, or five thousand pounds, as he has in- 
struments, which, in exchange, would be measured by these sums 
respectively ; and, as in common life all things are considered, 
not as they are, but merely in their actions and relations, instru- 
ments come there, also, to be spoken about, and conceived of, 
altogether in the relation they have to certain pieces of gold 
and silver. 

These are not the only effects which the exchange of instru- 

* See Note Gr. 

t Thus the Knight parted with a link or two of his gold chain, when in 
need, and in more ancient times the traveller carried his bag of gold dust. 

25 


194 


OF THE NATURE OF STOCK. 


merits for one another, and the consequent use of money as the 
medium of exchange, have produced in our conceptions of them. 
The system of exchanges, being attended by that of credit, 
implies the existence of some mode of ascertaining the amount 
to be rendered back, for instruments received in trust. It is 
sufficiently obvious that this must be determined by the order to 
which the principle of accumulation, and the time it has had to 
operate, has carried the formation of instruments in the society. 
If, in any society, instruments are at the order D, doubling in 
four years, then one receiving an instrument on trust, for four 
years, will, at the end of that period, have to return two of the 
same sort and quality. If they are at the order E, he will have 
to return two at the end of five years, &ic. Thus it is a com- 
mon practice in many parts of North America, especially in new 
settlements, to sell cattle and sheep on trust, the terms being 
that double the number thus transferred, is to be returned in four 
or five years, as the agreement may be made. More generally, 
however, much shorter periods are adopted, for the settlement of 
accounts. The natural periods of a year, and a month, have in 
different times and places, been made choice of for this purpose. 
It is then necessary to calculate what is due, by the one party 
to the other at these periods, and these calculations are naturally 
made in money. 

Instead, for instance, of returning two cows at the end of five 
years, the bargain may be, that a proportional sum is to be paid 
at the end of the first, second, third, fourth, and fifth years. 
Were money paid for the cow immediately, the amount we shall 
say would be twenty dollars, the double of that, which would 
be the sum to be given were the time of payment deferred till 
the expiration of five years, is forty dollars. The annual pay- 
ment can neither be a fifth part of the one sum, four dollars, nor 
of the other eight dollars, but one between the two, in this case 
about six dollars. Again, the bargain may be, that a cow be 
returned, at the expiration of the fifth year, and that, for her use 
during that time, an annual remuneration be made ; this would 
be a half of the former annual payment, nearly three dollars, 
and that sum accordingly, when such an arrangement takes place, 
is the usual yearly payment, for what is called the rent of the cow. 
Whatever order instruments may be at, some similar calculation 
might determine, what should be the proportion annually paid 


OF THE NATURE OF STOCK' 


195 


for the use of any of them. The employment of money in these 
calculations has simplified them, by the introduction of general 
rules. The return which instruments make, is estimated at so 
much in the hundred, or per cent, that is, in the hundred pounds, 
dollars or whatever may be the current coin. Reducing our 
orders to this phraseology, they would be respectively : — 


A 100 per cent, per ann. 
B 41 « “ 

C 26 “ “ 

D 19 “ “ 

E 15 “ « 

F 12 “ “ 

G 10 “ “ 


H 9 per cent, per ann. 

I 8 “ “ 

J 7 “ “ 

K 6, 5 “ “ 

L 5, 9 “ 

M 5, 5 “ 


It is on these principles, that all reckonings are made, not only 
of instruments given on credit, but of those retained. In the 
latter case, the annual return is termed profits of stock, in the 
former interest. There is, however, this difference between the 
two, that, in the profits of stock, is generally included the return 
that has to be made, for the mental exertion and anxiety, and 
bodily fatigue, of the owner of the. stock. There is, also, a 
difference between them, in common language, arising from its 
being the practice to speak of the more favorable issues of in- 
struments, as determining the rate, without reckoning those that 
have turned out less favorably, or unfortunately. Thus Adam 
Smith : “ In a country where the ordinary rate of clear profit 
is eight or ten per cent, it may be reasonable that one half of it 
should go to interest, wherever business is carried on with bor- 
rowed money. The stock is at the risk of the borrower, who, 
as it were, insures it to the lender; and four or five per cent, 
may, in the greater part of trades, be both a sufficient profit 
upon the risk of this insurance, and a sufficient recompense for 
the trouble of employing the stock. 5 ’* Here, ordinary profit 
evidently means, not the average profit, but the profit of favora- 
ble years. The average profit of a merchant, for example, is 
not properly the profit he makes upon his more favorable adven- 
tures, but what he makes on all those adventures that yield a profit, 
whether great or small, after deducting the actual loss he may sus- 
tain on others. The average profits of all the merchants of any 


Wealth of Nations, Book I. c. III. 


196 


OF THE NATURE OF STOCK. 


country, also include their very favorable, their less favorable, and 
their losing adventures. In this way, using the term profit, for the 
return made from the outlay expended on the formation of the 
whole instruments spoken of, actual losses are also included in 
it, and, in speaking prospectively of future profit, the risk of 
future loss is included, and what Adam Smith calls the risk of 
insurance disappears. If in a country where the average profit is, 
in reality, only eight per cent, a particular merchant continue 
for some years, to make ten per cent, he may indeed expect, 
and is perhaps apt to expect, the same return in future years, 
but, unless in so far as he can truly calculate on his mercantile 
sagacity and activity being above par, in so doing, he acts im- 
prudently, and the chances are, that he is undeceived by having 
to sustain actual losses in succeeding years. 

We may then assume the rate of interest as a fair measure of 
the real average rate of profits, in any country, and consequently 
of the order in our series, at which instruments are there arrived. 
So receiving it, we shall find that it agrees very closely with the 
preceding observations. 

In China, we are told by Barrow, that the legal rate of inter- 
est is twelve per cent., but that, in reality, it varies from eighteen 
to thirty-six. , The remarks of other authors agree pretty accu- 
rately with this statement, fixing the orders at C or D. The 
Dutch seem, of all European nations, hitherto to have been in- 
clined to carry instruments to the most slowly returning orders. 
The durability given to all the instruments constructed by them, 
the care with which they are finished, and the attention paid 
to preserving and repairing them, have been often noticed by 
travellers. In the days when their industry and frugality were 
most remarkable, interest was very low, government borrowing 
at two per cent, and private people at three.* The former in- 
dicating an order doubling in about thirty-three years, the latter 
one doubling in twenty-three years. In ancient Rome, interest 
was in reality exceedingly high, from twelve to fifty per cent.f 
Were we farther to compare the orders in which instruments 
appear to stand in other countries, with the rate of interest in 
those countries, we should find the two every where correspond- 

* Wealth of Nations. 

t Histoire de l’usure par Boucher Paris 1819. p. 25. The laws against 
usury, there, as elsewhere, increased, instead of diminishing the evil. 


OF THE NATURE OF STOCK. 


197 


ent. I apprehend, however, that this is needless, for, as the 
reader must on consideration perceive, it is impossible it can be 
otherwise. Loans, indeed, pass under the name of money, but 
money is only the means of effecting the loan, it is in reality in- 
struments that are lent, and they must in return yield not much 
less than what is paid for their use, otherwise they would not be 
borrowed, and not much more, otherwise they would not be 
lent. 

The system of calculation, the foundation of which we have 
been considering as connected with exchanges, is convenient for 
all engaged in the business of transfers, and answers their pur- 
poses very perfectly. When applied, however, to speculative 
purposes, it labors under the disadvantage to which all practical 
general rules are liable, when assumed as speculative general 
principles. According to it, stock is regarded altogether, as 
measured by money, and an amount of stock is considered, simply, 
as an amount of money, or something that will bring money. 
The stocks, therefore, of different countries, are viewed as differ- 
ing merely in amount, and every increase and diminution of the 
stock, of the same country, as a simple addition, or substraction, 
of an homogeneous quantity. These events being so viewed, 
have been assumed so to exist, and the general increase and 
diminution of stock, have been treated of, as things, as simple 
in their nature, as the rows of digits employed to mark the 
amount of money by which they are estimated. Some of the 
fallacies hence arising, will be presently noted ; they will, I believe, 
be found to be the foundation of much of the contradictions, in 
which the reasonings on these subjects are involved. 


CHAPTER IX. 


GF THE EFFECTS RESULTING FROM DIVERSITIES OF STRENGTH IN THE AC- 
CUMULATIVE PRINCIPLE, IN MEMBERS OF THE SAME SOCIETY. 

The mass of the individuals composing any society, being 
operated on by the same causes, and having similar manners, 
habits, and to a great extent feelings also, must approximate to 
each other, in the strength of their effective desires of accumu- 
lation. In the view we have hitherto taken of the subject, we 
have considered them, as not only approximating, but coinciding 
in this respect. In reality, however, they do not do so. Though 
the desire may be generally of nearly equal strength, throughout 
the bulk of the society, it cannot altogether be so, but must vary, 
in some, in degrees scarcely perceptible, in others, as in every 
community there will be men of characters opposite to their 
fellows, very largely. But there are nevertheless circumstances, 
which, notwithstanding these variations, restrain and confine the 
construction of instruments, either altogether to the same order, 
or to orders much more nearly approximating to each other, than 
would be indicated by the strength of the effective desire of 
accumulation, in the individuals forming them. 

The accumulative principle of the different individuals com- 
posing the same society, may vary from the average strength, 
either by being above, or below it. There will, in every society, 
be some individuals not disposed to construct any instruments, 
I)ut such as are of orders of more quick return than those gen- 
erally formed, as there will be others, disposed, if they have no 
opportunity otherwise to make additional provision for futurity, 
to expend part of their revenue in working up materials even to 
orders of slower return, than the average of the instruments 
already formed. 


OF THE NATURE OF STOCK. 


199 


Persons of the former class, possessing any amount of funds 
presently available, would be inclined to apply them to the for- 
mation of instruments, could they obtain materials, returning so 
largely as to correspond to the estimate they make of the future 
and the present. But they will not be able to find any such 
materials, for they will have been previously appropriated, and 
wrought up more laboriously than they would be inclined to do, 
by other members of the society. If, again, the funds of an 
individual of this class, consists of instruments whose returns are 
future, he will gradually transfer them to other members of the 
society, whose accumulative principle is stronger than his own ; 
for, according to his estimate of the future and. the present, he 
will receive more for them than they are w T orth. It thus happens, 
that all the members of any society, whose accumulative princi- 
ple is lower than the average, are gradually reduced to poverty. 
The same persons, moving to a community where instruments 
were of orders of quicker return than those correspondent to the 
strength of their own accumulative principle, would acquire pro- 
perty. Thus the artisan, or laborer, who, in England, never 
thought of saving, is excited to accumulate property, in North 
America. The Chinese, who, in Europe, would be very pro- 
digals, are accounted frugal in the tropical regious of Asia, and 
there attain to considerable wealth. 

Individuals whose accumulative principle, is, on the other hand, 
stronger than the other members of the community, would be 
inclined to construct instruments of orders returning more slowly 
than usual, rather than not devote a part of their present funds 
to additional provision for futurity. But this is not necessary. 
They are the natural recipients of the funds passing from the 
hands of the prodigal, and their excess of providence, balances 
his defect, and maintains the whole mass of instruments in the 
society, at nearly the same orders. 

It thus happens, that all instruments capable of transfer, are 
in the same society, at nearly the same orders. Some instru- 
ments, however, cannot be transferred, for many of them that 
are of gradual exhaustion, and directly supply wants, must belong 
to the persons exhausting them. Wearing apparel, household 
furniture, and sometimes dwelling-houses, cannot be the pro- 
perty of any other individuals than those in whose service they 


200 


OF THE NATURE OF STOCK. 


are exhausted. Such instruments must often, therefore, corres- 
pond to the strength of the accumulative principle of their pos- 
sessors. If they belong to persons in whom the strength of 
this principle is greater than the average of the society, they will 
not indeed vary much from the prevailing orders, the surplus 
funds of such individuals, going, as we have seen, to the acqui- 
sition of the stock of the prodigal. The difference is probably 
just sufficient to indicate the character of their owners. Thus, 
if we inspect the dwelling-houses and furniture of rigid econo- 
mists, we generally perceive that they have an air both of 
durability and efficiency, distinguishing them from those of the 
rest of the community. 

When, again, individuals, in whom the strength of the effective 
desire of accumulation is below the average of the society, have no 
other stock but what is embodied in instruments of this sort, these 
instruments, in their exhaustion of them, will correspond to the 
weaker power of this principle. Such, unfortunately, is sometimes 
the case, with what are termed the lower classes of society ; causes 
to which we shall afterwards advert, sometimes generate a spirit of 
improvidence among these classes, and diminishing the estimation 
in which they hold the interests of futurity, incapacitate them 
from expending any present funds, as a provision for these inter- 
ests, if they do not return either very speedily, or very largely. 
The consequence is, that the instruments of this sort which they 
possess, have but a very small capacity for the supply of their 
coming needs, and that they are unable to extricate themselves 
from pressing poverty. 

Thus, suppose that a man in this class, has two different hats 
offered him, the present appearance, and immediate comfort in 
the wear of which are nearly equal, but of which the one, from 
its being formed of better materials, and these wrought up with 
more care, is much more durable than the other, and cannot be 
afforded but at a higher price than it. Let it be that four days’ 
labor is demanded for the one, and six and a half for the other, 
but that the former will last only one year, the latter two. It is 
evident, that, if the effective desire of accumulation of the indi- 
vidual is very weak, not carrying him beyond the order A, he 
will prefer the former, and at the expiration of the year will 
consequently have to expend again an equivalent to four days’ 


OF THE NATURE OF STOCK. 


201 

labor, instead of having this want supplied by a previous ex- 
penditure of two and a half days’ labor.* 

We may, in most cases, judge very accurately of the strength 
of this principle among individuals of this order of society, pea- 
sants, mechanics, day-laborers, and domestic servants, by the 
qualities of the instruments of these sorts with which they pro- 
vide themselves. By observing, for example, the kind of shoes, 
gowns, blankets, which a woman in this rank of life purchases, 
one may form a near guess of her character. Were she to 
make a point of selecting such as would wear well, though some- 
what dearer, or less showy, we might safely conclude that the 
influence of the present, did not prevent the interests of the future 
from being carefully regarded. On the contrary, did she choose 
the unsubstantial, but more showy, or cheaper article, we might 
with equal certainty infer, that the present, in her estimation, far 
outweighed the future. All who have had opportunities of 
making such observations, must have remarked the influence, 
which the one line of conduct, or the other, exercises on such 
individuals. The difference between them constitutes the main 
distinction between thrift, and unthrift, the former of which is 
the only safe means, that persons in the lower walks of life 
possess, through which they may give a beginning to their for- 
tunes. The store accumulated by the exercise of the virtue 
of providence, which, as it shows itself in them, we thus denom- 
inate, enables them to turn the funds of their daily labor to the 
construction of other instruments than those, and, at length, to 
add largely to that stock which is destined to supply the future 
wants of the whole society. What is true concerning one indi- 
vidual, is true concerning many, and on this account, the degree 
of strength of this principle possessed by what are called the lower 
orders, exercises a great influence on the amount of the general 
stock, accumulated by the society. The influence, in this re- 
spect, of those who form that class, is, indeed, much more im- 
portant than we might at first suspect. Their greater numbers 
would alone make up for the smaller power of each, but besides 

* It is a matter of indifference, it may be observed, to the hat maker, which 
of the two he disposes of. Both hats are to him instruments for procuring 
labor, or some equivalent to it. Of all his stock, it is only the qualities of 
the one he makes choice of for his own wear, that can, in any degree, indi- 
cate the strength of his own effective desire of accumulation. 

26 


202 


OF THE NATURE OF STOCK. 


the weight which this consideration is entitled to, the amount of 
labor that may, with advantage, be accumulated by the mere 
working man, in instruments of this sort, is, in reality, very con- 
siderable. His dwelling and its contents may fitly be considered 
as a store that he possesses, for the supply of the future wants 
of himself and family, or, what is the same thing, for the abridg- 
ment of their future labor, and according as there is much or 
little of this provision wrought up in them, will the one be sup- 
plied or the other saved. First, the house itself, as the place 
in which he and they live, and pursue many of their various 
occupations, will not yield the advantages it ought, if the apart- 
ments be not so roomy, and well lighted, as neither from the 
closeness of the atmosphere to induce debility or disease, nor, from 
their confinedness and obscurity, to cramp and retard the inmates 
in their several labors. Then, according to the compactness and 
finish that is given to the w T alls and other parts will the inclemency 
of the weather be more or less excluded, and a greater or less 
quantity of fuel, be in future requisite. The cupboards, where 
things may be readily put past, and as readily found, and where 
they are preserved from destroying causes and accidents, the 
cooking utensils, the bedding, and the numerous other articles of 
the sort, that enter into the domestic economy of a frugal and 
industrious family, are to be considered, in like manner, as so 
many means by which future labor, or future expense may be 
prevented or diminished. The extent of the saving which the 
provident working man in this way effects, is sometimes very 
great. In a rude, or imperfectly finished fabric, fuel must be 
wasted ; in one where there are not proper conveniences for pre- 
serving and cooking food, food must be wasted ; and where there 
are not fit places for depositing articles of wearing apparel, they 
must soon get dirty, and receive much unnecessary damage. In 
a well finished, and convenient habitation, too, the inmates lose 
no time, either from torpor in winter’s cold, or languor in sum- 
mer’s heat ; they have space and comfort to pursue their various 
labors, and unless the periods given to repose, and to their meals, 
may employ the whole time they spend at home, in some useful 
or agreeable occupation. The animal frame, also, it is to be 
observed, when exposed to the extremes of heat and cold, and 
to damp, seems to require a greater supply of nourishment, than 
when properly sheltered and protected. This is seen in the 


OF THE NATURE OF STOCK. 


203 


inferior animals, and agreeing with them in other parts of his 
corporeal constitution, man does not here differ from them, and 
when comfortably lodged, is preserved in health and vigor, on a 
diet which he would else find too scanty. The amount of pro- 
vision for future needs, that may, in a similar manner, be embo- 
died by a laborer or mechanic having a family, in bedding, and 
other furniture, and in kitchen utensils, is very considerable.* 

It is to be here observed, that the prevalence of a really 
economical spirit among the working class, implies no diminution 
of the purchases made by them. On the contrary, it being the 
desire of the laborer, under such a supposition, to turn every six- 
pense he can earn, to some useful employment, either to the 
acquisition of necessaries, or other commodities, he must have 
as many demands on the capitalist as before. The change pro- 
duced, would be, in the articles purchased. The proportion of 
those providing for the wants of futurity would increase, that of 
those ministering to the gratifications of the present, diminish. 

Thus, such a spirit pervading the working classes in Great 
Britain, at the present period, would probably lead them to 
abandon all delicacies of fare, and would occasion a diminished 
consumption of alcoholic liquors, tea, coffee, silks, expensive 
calicoes, and the more showy articles of apparel. It would, on 
the other hand, increase the demand for the higher priced, and 
more substantial cloths, cottons, blankets, kitchen utensils, and 
articles of that sort, and for all matters used in the construction 
of dwelling-houses. 

Neither, it is to be observed, would the prevalence of a con- 
trary spirit among those orders, and a proneness to seize on the 
enjoyments of the present, occasion any immediate diminution 
of their demands on the capitalist. It would merely lead to his 
providing for them a greater amount of instruments of sudden 
exhaustion, contributing to the gratification of the instant, and a 
smaller amount of those of gradual exhaustion, providing for 
the wants of futurity, and to his giving a construction to the 
latter, that might make them correspond during the period of 
their exhaustion, to the lower degree of the accumulative prin- 

* If the reader be skeptical concerning the effects of a sufficient supply of 
materials and utensils, in diminishing the expense of diet, I would request 
him to read Count Rumford’s Essays. 


204 


OF THE NATURE OF STOCK. 


ciple of the individuals in whose service they were to be exhaust- 
ed ; such a circumstance, would, therefore, occasion the production 
of a larger portion of delicacies, of articles of nourishment, more 
grateful to the senses, but not more nutritious or more whole- 
some than cheaper fare, of fewer substantial articles of dress 
and furniture, and more of those that are flimsy and showy. 

The whole stock of instruments owned by the laboring popula- 
tion, would thus contain a smaller amount of the means of less- 
ening future labor, or expense, as their effective desire of accu- 
mulation diminished in strength. Even instruments that they do 
not own, but of ^which they pay for the use, as dwelling-houses, 
rented by them, are in a great measure, reduced to the same 
order as those which they would themselves form. In the rank 
of society above them, improvidence is long before it show on 
the dwelling ; it attacks first other funds ; but, as they have not 
these other funds, it necessarily shows itself in the funds they 
have. Thus, if a family of improvident habits get the use of 
the best finished dwelling, they soon so damage it, as to deprive 
it of its efficiency. Some manifestation of what we call careless 
habits, want, that is, of taking thought of the consequences of 
what one is doing, breaks, we shall say, a pane or two of glass, 
in some of the windows. To get these replaced is present ex- 
pense, and trouble ; demands, perhaps, the doing without a pot 
or two of liquor, or some other immediate enjoyment, and re- 
quires the trouble of going for the glazier, or acting for him. An 
old hat or two, or some bundles of rags, stuffed into the holes, 
shifts off* this denial of present pleasure, or ease, to some other 
time, a time which, similar habits, while they render the arrival 
of it more needful, indefinitely postpone, and the window that 
had been formed to exclude wind and wet, and admit light, 
serves, at last, to let in the wet and wind, and shut out the light. 
Pursue the effects of these habits, this absorption in the present, 
aqd heedlessness of the future, as they show themselves upon 
the plaster, the floor, the ceiling, and we shall find them soon 
doing away with the efficiency of the whole dwelling, for pro- 
curing enjoyment, or saving toil, and reducing it, as far as it is a 
provision for the future wants of its inmates, to a condition little 
superior to that of the miserable mud hut. 

The presence of this evil, to a greater or less extent, is mark- 
ed, by the high rates of interest given, for the petty sums bor- 


OF THE NATURE OF STOCK. 


205 


rowed by individuals of this class. The increase that is said to 
have taken place in the number of pawn-brokers’ shops in Eng- 
land, and the high rate of interest there demanded, and given, 
by mechanics, for small loans afforded to one another, would seem 
to indicate its presence, to a degree sufficient to alarm a lover of 
his country.* 

When we come to treat of the causes that seem the great 
agents in diminishing the stock owned by a community, the mode 
in which the strength of the accumulative principle is weakened, 
and extravagance introduced among the lower classes, and the 
effects prising from these circumstances, will present themselves 
to our notice. It will then appear, that this diversity of the 
orders of instruments owned throughout a community, can never 
exceed certain limits. On this account, and because the stock 
belonging to the lower classes, when the accumulative principle 
is much lower with them than with the higher ranks, is always 
inconsiderable, the orders to which instruments belong in the same 
society, and the returns they make, or the ordinary profits of 
stock, may be said to be nearly equal throughout every com- 
munity. 

This uniformity in the orders of instruments, and in the returns 
made by them, in conjunction with the system of calculation, 
by which, as we have seen, transactions relating to the transfer 
and accumulation of capital are regulated, produces effects on 
the conceptions of the individuals concerned, worthy of being 
noticed. 

The rules by which all persons regulate their proceedings in 
the construction of instruments, are drawn from the returns made 
by them, that is, the profits yielded by them. If an instrument, 
or a series of instruments, which it is proposed to construct, 
promise to yield the usual profits, the enterprise is undertaken, 
and, if it make the anticipated returns, it is considered a profita- 
ble, or gaining business ; if it do not promise to yield, and do 
not yield the usual profits, it is considered an unprofitable, or 
losing business. Probably, too, it is not considered, that this 
mode of expression is correct, only as relative to a particular 

* Pawn-brokers charge, I believe, about 20 per cent. The combinations 
of the working classes in societies, or unions, have lent their members small 
sums, if I well remember, at a rate nearly equal. I cannot, however, recollect 
my authority for these statements. 


206 


OF THE NATURE OF STOCK. 


society, and not absolutely, to all societies, and that what in one 
country or time, may be an unprofitable undertaking, will, with- 
out any change of returns, be profitable in another country or 
time, and vice versa. 

Thus, suppose an English land-holder, whose income far ex- 
ceeded his outgoings, to be asked why he does not apply his 
means to enclosing and draining some sea marsh, his answer pro- 
bably would be, it would not pay. It would only yield me two 
per cent, when finished, and landed property ought to yield four, 
I can always find estates to purchase, which will produce that. 
Ask him, why, instead of stone fences round his fields, which 
decay, or hedges, which require constant trimming and dressing, 
he does not put iron railings, he will give the same answer, “ it 
would not pay.” Ask the house-builder, why this is not cut 
stone, instead of brick, that oak instead of pine, this again iron, 
instead of oak, or that copper instead of iron, and consequently 
the whole fabric doubly durable, he also will reply “ it will not 
pay.” In all these cases*, and a thousand others that might be 
put, the answer is abundantly sufficient as regards the individual, 
but is no answer at all as regards the society. The only answer 
that can be given, in old countries at least, for such or similar 
neglect of materials, is, that there, the effective desire of accu- 
mulation is not sufficiently strong, to reach them, in the present 
state of science and art. Were there fewer prodigal land-holders, 
in England, estates could not be so easily got, and part of the 
funds of those who buy estates, would be laid out in improving 
land at present unproductive, and the salt marsh might be drain- 
ed. In the same way, houses and other instruments would be- 
come more substantial, and better finished, were the strength 
of the accumulative principle throughout the whole society to 
advance. 

In China, precisely similar replies would be made by capital- 
ists, concerning the draining of marshes, the erection of more 
substantial buildings, and other enterprises requiring a large pre- 
sent expenditure, for a remote future return. There such un- 
dertakings would be really unprofitable, not paying the usual 
profits of stock, and they can only in like manner become pro- 
fitable, by the accumulative principle acquiring increased strength, 
and instruments being wrought up generally to orders of slower 
return. 


OF THE NATURE OF STOCK. 


207 


This, however, is not the view, which most readily presents 
itself to practical meq. To a person engaged in the practice of 
an art, the particular mode which the circumstances of the coun- 
try to which he belongs has rendered the most profitable, and 
best, is considered as absolutely the best, and most profitable, 
and if he remove to another country, he is apt to conceive not 
only that his knowledge of the art is superior, which may per- 
haps be true, but that the precise mode in which he applies that 
knowledge to practice, is also the best, that can any where be 
adopted, which is very possibly erroneous. 

A English farmer, for example, who comes to North America 
to pursue his art, almost always commences on the same system 
which he followed in Britain. His agricultural implements, his 
harness, his carts, waggons, Sic. are all of the most durable and 
complete, and, therefore, of the most expensive construction, 
and his fields are tilled as laboriously, and carefully, as were 
those he cultivated in his native land. Sometime usually elapses, 
before he discovers that he may do better by being content with 
more simple, and less highly finished implements, and that it will 
be for his advantage to cultivate his land less laboriously, though 
not less systematically. His neighbors tell him, indeed, from the 
first, that if he expects the same profits as they have, he must 
have less dead stock on his hands, and must give more activity 
to his capital ; but he is slow of believing them. 

Similar observations might be made, concerning almost every 
other class of artists, who emigrate to the new world. They all, 
at first, give a degree of finish to the materials on which they 
employ their industry, that is unsuited to the circumstances of 
the country. 


CHAPTER X. 


OF THE CAUSES OF THE PROGRESS OF INVENTION, AND OF THE EFFECTS 
ARISING FROM IT. 

Invention is the most important of the secondary agents, to 
the influence of which man is subject. To us, it is the great 
immediate maker of almost all that is the subject of our thoughts, 
or ministers to our enjoyments, or necessities, nor is there any 
portion of our existence, which is not indebted to its antecedent 
forming power. Wherever it really is, it is recognised as one 
and the same, by this its formative capacity. It is always a 
maker, and, in a double sense, a maker. From the depths of 
the infinity lying within and without us, it brings visibly before 
us forms previously hidden. These are its first works. But 
neither does it intend to stop, nor does it, in fact, stop here. 
The forms which its eye thus catches, and its skill “ bodies forth ” 
into material shape, pass not away ; they remain. Things of 
power, true workers, drawing to themselves, and fashioning to 
their semblance, the changeable and fleeting crowd, that time 
hurries down its stream, they are, in truth, the only permanent 
dwellers in the world, and rulers of it. In this the double power 
of his works, the mathematician is as much a maker as the poet, 
and the poet as the mathematician, and genius in all its manifes- 
tations, may, in so far, be considered as the same power, and as 
excited to action by similar causes. 

Our subject leads us to attend to invention, merely as it con- 
cerns itself with the material world. But, as the motives ex- 
citing the men in whom it is exhibited to give themselves up to 
its requirements, must be held among the chief of the causes of 
its manifestation, and as they, who in this department, have been 
most extensively inventors, have in general communicated little 


OF THE NATURE OF STOCK. 


209 


of the principles that animated and sustained them in their career, 
science and art being silent of themselves, we may be allowed to 
give wider compass to our view, and to cite, when our purpose 
requires it, those who have been real discoverers, in any of the 
various regions over which the power of this principle extends. 

The motives, exciting to this sphere of action, are not very 
apparent. 

Man is essentially imitative ; his instincts impel him to amal- 
gamate with the mass. From the first moment of his existence, 
his faculties are on the stretch, drinking greedily in surrounding 
gestures, feelings, principles and modes of action, which he again 
communicates ; he seems by turns a recipient of existing impres- 
sions, and a transmitter of them to others. Nor, unless he look 
far beyond himself, is there any evident motive for his endeavor- 
ing to extricate himself from the ever-whirling circle of which 
he forms a part. Hundreds of millions have preceded him ; to 
learn and practise, what they have left, is the direct road to his 
goods, pleasure and honor ; why then should the individual waste 
the sweets of a momentary existence, in rashly and needlessly 
tasking his feeble powers, to form a new path, when one already 
exists, along which so many have trodden, and which their foot- 
steps have beaten smooth? One of the Jesuits having been 
asked, why the Chinese had made no progress in astronomy, 
beyond the. rude elements of the science that they had possessed 
from a very remote antiquity, answers, from the indolence, and 
want of application to these pursuits, of the men of succeeding 
ages, and from their preferring, like those of the present day, 
what they have esteemed their immediate and substantial inter- 
ests, to the vain and barren reputation of having discovered some- 
thing new. The reason, which the father Parennin assigns for 
the stationary state of their astronomy, may be transferred to all 
their other sciences, arts, and pursuits, which fifty generations 
have contented themselves with learning, practising, and teaching, 
as they received them from men of times more distant. A well 
weighed attention to what is for their present, and as they say 
substantial interests, has led them to do this, and forbid them to 
do more. 

In that Empire, the door to wealth and honor is not absolutely 
barred to any one, and in this it would seem superior to other 
lands, that there, whoever possesses learning has a key that will 
27 


210 


OF THE NATURE OF STOCK. 


infallibly open it. Let him who would raise himself superior to 
his fellows, give his youth to study, let him carefully make his 
own a due portion of the knowledge, the wit, the eloquence, or 
what passes for them, stored in the volumes his masters put in 
his hands. These acquirements will be the passports to the 
places round which riches and distinctions cluster. Making use 
of them industriously, prudently, perseveringly, he may certainly 
attain the rank of a skilful physician, a learned jurist, a practised 
and ready speaker, or, perhaps, a man versed in the constitution 
and policy of the empire, fit to take on him the office of a states- 
man, and share its rewards and honors. He may be attended 
by obsequious crowds ready to flatter his vanity, minister to his 
pleasures, conceal his weaknesses ; alive he may be honored, 
dead lamented, — why then abandon these sure and substantial 
advantages, to pursue what there is but a chance of gaining, and 
which, even if at length attained, is but empty fame, — a breath, 
— the filling at the best, 

u A certain portion of uncertain paper.” 

The practical wisdom of the Chinese, answers at once it were 
folly. 

Is that, which is sound practical wisdom among those Asiatics, 
the reverse of it among us Europeans ? The reader may deter- 
mine, by casting his eyes about him, to discover who are the men, 
who have been most successful in attaining wealth, comfort, re- 
spectability ; in avoiding dependence, misfortune, calumny. Who- 
ever, or, wherever, he may be, certainly he will not find it is 
they who have sought to be, or have really been men of genius. 

We in vain search for any sufficient motive exciting to this 
course of action, unless the good arising from communicating 
good, and the consequent desire to be a benefactor in the most 
extended possible manner.* This desire is the proper aliment 
of genius. “ Leave me not,” the lay it, 

“ In its loneliness, 

Its own still world, amid th’ o’er peopled world, 

Hath ever breathed to love.” 

When very strongly felt, it irresistibly impels those who are 

* This is to be received as concerns our existence, limited to the earth and 
to time, the only light in which it can with propriety be considered, in these 
speculations. Were we to view it as belonging to the universe, and to eternity, 
action directed to the purposes referred to, would not be impeded from the 
considerations thus presented, but would, on the contrary, derive from them 
freedom and energy. 


OF THE NATURE OF STOCK. 


211 


conscious of capacities equal to the attempt, spite of every obstacle 
to be overcome, or pain to be endured, to task themselves to thp 
performance of works of permanent and diffusive utility. To 
reflective minds, and large and generous natures, the creations 
of genius must present themselves, as of all works, those most 
extensively conferring enjoyment and power:* and their success- 
ful execution, as of every enterprise the noblest ; nor need we 
wonder that to such it should have a voice of magical, and almost 
resistless attraction. 

When the peasant poet of Scotland seeks to recall an image 
of his earliest self, he finds there uppermost this master passion, 
this “boundless love” of his fellows, and his native land, urging 
him to make it appear by something worthy of it, and marking 
its strength. This was the wish, 

“ Ev’n then a wish (I mind its_ power,”) 

A wish that, to my latest hour, 

Shall strongly heave my breast,” 

that led him to the realms of song. This was in truth the 
genius, 

“ Sua cuique deus fit dira cupido,” 

who “ threw her inspiring mantle over him,” and awakening 
powers else torpid, enabled him to draw from out the vulgarity 
before hiding them, images not idly falling, and to fall, on many 
a heart, patriotism ardent and self-devoting ; passion manly yet 
tender ; love without the coarseness of the one class of society, 
or the affectation or epicurism, of the other. 

Who can estimate all the effects of these hasty fragments of 
the poet’s art ? If we consider the subject well, and weigh it 
fairly, we shall confess, that their author has exercised an in- 
fluence already greater, and far more abiding than any of the 
men of his country and age. It is thus that genius manifests 
the potency of the principle that inspires it, and that the simplest 
lays of the simplest bard, may have a power passing far, that of 
the triumphs of the statesman, or the warrior. The one wakens 
energy, otherwise dead, into action, the other merely directs that 
action. 

“ But,” it may be said, and not without a show of reason, 

* Videtur inventorurri nobilium introductio inter actiones humanas longe 
pri mas partes tenere. Lord Bacon. 


212 


OF THE NATURE OF STOCK. 


“ why, if genius is roused and moved by principles so pure, does 
it happen, that the undoubted possessors of it, are themselves so 
often defaced by faults, and that we speak of them, and their 
aberrations, as if naturally conjoined ? Ambition, the desire of 
excelling, a much more questionable motive, would rather seem 
its proper stimulant.’’ 

'As we are not attempting to investigate the governing principles 
of classes, but of societies, it were, perhaps, enough in answer to 
observe, that the existence of genius among a people, implies at 
least, the diffusion of a tincture of generous feelings, somewhere 
throughout the mass. If we were to' see an individual, periling 
his own life, to rescue another from impending danger, it might 
be doubtful to us whether the action proceeded from a desire of 
saving the person in danger, or of the applause and praises fol- 
lowing the doing of it ; but that applause, and those praises, 
would themselves evince a general perception of the moral worth 
of such an action, supposing it to proceed from the purest mo- 
tives, and correspondent sympathy in the pleasure likely to be 
experienced from it. Vanity could receive no gratification from 
a deed of this sort, where the spectators only regarded it as an 
incomprehensible piece of rashness. In like manner, though it 
seem to us, that many who have eminently succeeded in the 
pursuits of which we speak, have been actuated merely by the 
desire of gratifying a selfish vanity, still, that the attainment of 
these objects should be followed by the warm and sincere applause, 
that alone constitutes genuine fame, is a proof at least, of the 
existence somewhere, of a due appreciation of the motives from 
which these pursuits are supposed to proceed, and of sympathy 
with the pure gratifications their success is presumed to yield. 
But it enters into my design to show, that, without supposing the 
two classes actuated by different principles, there are sufficient 
causes for those wanderings, as they are called, of genius from 
the common path, for that contrariety of course, that seldom 
intermitting opposition and strife, which have almost every where 
been maintained, between the society in which they existed, and 
the individuals, who have been ultimately the great instruments 
of ameliorating and elevating its condition. Such an exposition, 
removing part of the obstructions to our view, will make it appear, 
that it is not so much from the diversity of the moving powers, 


OF THE NATURE OF STOCK. 


213 


as from the imperfections of the bodies impelled, that this jarring 
and contrariety of action arises. 

It is necessary to prerhise, that for the present purpose, two 
classes occasionally confounded together, must be kept apart. 
Real inventers, the men whom we have alone to consider, differ 
from mere transmitters of things already known. The latter are 
an acknowledged, and very useful class, in all societies, but, they 
neither encounter similar difficulties, nor produce similar effects 
to the former. They neither oppose, nor direct the current. 

In the gradual progress of things, the media for communicat- 
ing ideas have been chang'ed ; types have come to do, in a great 
measure, the office of the voice. What in ages past would have 
formed a discourse, or harangue, is now a book, or part of a 
book. Among the many vast consequences of the revolution, 
we overlook the small one of its occasioning the classing under 
one name, of those who are enlargers of the stock of knowledge, 
and those who are merely efficient communicators of portions of 
it. They are all successful authors, authors, that is, of books 
which are read. Just so, the bard or bards of the elder ages 
of ancient Greece, who first embodied in song the deeds of the 
besiegers of Troy, and they who, in after times, repeated the 
verses they had learned, were all chanters of heroic lays, many 
too of the latter may have been more successful chanters than the 
former, for they sang to ears prepared, but there was between them 
notwithstanding, an essential difference. There is also a line 
distinguishing the mere framers of books, from the original makers 
of their materials ; it may not be very easily drawn indeed ; but 
this is unnecessary for our purpose, it is sufficient to have pointed 
out its existence. It may be observed, too, that as of bards, so 
of authors, they who are mere compilers and repeaters, may be 
more successful than they who are real inventers, they may better 
suit their productions to particular times, tastes, and exigencies, 
and, besides, they can always find an audience prepared, by pre- 
vious training, to applaud. 

The tendency of these pursuits is to withdraw those occupied 
in them, from the daily business of society. They fill not the 
places open for them, and which they are expected to fill ; even 
when necessity pushes them for a time into them, and compels 
them to mingle with the crowd, they are marked as not belonging 
to it. Abstract and scientific truth can only be discovered, by 


214 


OF THE NATURE OF STOCK. 


deep and absorbing meditation ; imperfectly at first discerned, 
through the medium of its dull capacities, the intellect slowly, 
and cautiously, not without much of doubt, and many unsuccess- 
ful essays, succeeds in lifting the veil that hides it. The pro- 
cedure is altogether unlike the prompt determination, and ready 
confidence, of the man of action, and generally unfits, to a greater 
or less degree, for performing well the part. He, again, who 
dwells in the world of possible moral beauty and perfection, 
moves awkwardly, rashly, and painfully, through this of every- 
day life, he is ever mistaking his own way, and jostling others in 
theirs. To the possessors of fortune, these habits only give 
eccentricity ; they affect those of scanty fortune, or without for- 
tune, with more serious ills. Unable to fight their way ably, 
cautiously, and perseveringly, through the bustle of life, poverty, 
dependence, and all their attendant evils, are most commonly 
their lot. 

tl Toil, envy, want, the patron, and the jail,” 

are calamities, from the actual endurance of some of which, or 
the dread of it, they are seldom free. These, however, they 
share with other men ; there are some peculiarly their own. 

Pursuing objects not to be perceived by others, or if perceived, 
whose importance is beyond the reach of their conceptions, the 
motives of their conduct are necessarily misapprehended. They 
are esteemed either idlers, culpably negligent in turning to account 
the talents they have got, dullards deficient in the common parts 
necessary to discharge the common offices of life, or madmen 
unfit to be trusted with their performance ; shut out from the 
esteem or fellowship of those whose regard they might prize, 
they are brought into contact with those with whom they can 
have nothing in common, knaves who laugh at them as their 
prey, fools who pity them as their fellows. Their characters 
misunderstood, debarred from all sympathy, uncheered by any 
approbation, the “ eternal war,” they have to wage with fortune, 
is doubly trying, because they are aware, that, if they succumb, 
they will be borne off the field, not only unknown, but miscon- 
ceived. To have merely to pass without his fame, the poet 
paints as a fate, capable of adding double gloom to the shades 
below, 

11 Sed frons lseta parum, et dejecto lumina vultu, 

* * * 

Nox atra caput tristi circumvolat umbra.” 


OF THE NATURE OF STOCK. 


215 


What must it be to those, then, who feel, that, ere final ob- 
livion hides them, calumny must for a time prolong the memory 
of their existence ? 

Imperfect man is ever prompt, without any consideration of 
the motives of the agents, to conceive of the evils he endures 
as of wrongs received, and to be avenged, on the doers of them. 
We need not wonder then, that the manifold sufferings of genius, 
should sometimes place it in opposition to humanity itself, and 
that, in the inconsistency and recklessness of passion, it should 
turn in anger, and in scorn, as its bitterest enemy, on that of which 
it is, in heart, the truest lover. 

These are circumstances, largely affecting the possessors of 
this faculty, even before they have succeeded in making it mani- 
fest, before they have been able to give outward shape to their 
inward conceptions. There are others, operating similarly, after 
they have succeeded in producing them. What is really new, 
has to encounter obstacles of two sorts. It is the nature of 
men to be copiers, and, with exceedingly few exceptions, they 
are nothing more. Mere followers they are of rules, walkers 
in well-beaten paths. Whatever, therefore, is in any degree 
really new, being probably beyond these rules, is also beyond 
their judgment. Nor is this the worst ; it is also very fre- 
quently in opposition to it ; it disagreeably disturbs and jars the 
existing systems, by which men guide their feelings and reason- 
ings. Hence the works of almost all men of really inventive 
powers, have, at first, been either slighted or decried. Cervantes, 
one of the most powerful, and original geniuses of modern times, 
and who ultimately operated as largely on affairs, as any man 
whom they have witnessed, was placed by his contemporaries 
far below the subservient taste of Lope de Vigo, and, in his 
last days, had to turn from Don Quixote to a theme correspond- 
ent to the bombast of his age.* It is needless to multiply ex- 
amples, — in a similar walk Tasso, and Shakspeare ; in another, 
Hume and Montesquieu ; in another, Bacon and Galileo, experi- 
enced at first either comparative neglect, or partial, or general 
opposition. Few names that now pass current, but rose with 

* We cannot read the romance of Peresiles and Sigesmundi, published after 
his death ; it had more success than any of his works. “ Jamais cet homme 
celebre,” says one of hi3 biographers, “ ne fut a sa veritable place : on dedaigne 
ses talens on meconnut ses vertus, on fut insensible a sa misere.” 


216 


OF THE NATURE OF STOCK. 


difficulty, and were nearly again submerged in their earlier pro- 
gress, by the shock of opposing prejudices. 

The practice of printing, has gradually, as it has extended the 
circle of readers, produced effects on the productions of genius, 
not here to be passed unnoticed. The author looks to what he 
calls the public, to those, that is, who read, or rather to his own 
talents for producing works that will find readers, for the pecun- 
iary rewards of his productions. This circumstance has had 
much effect, both in turning the powers of men of talents to 
subjects that may generally interest, and in obliging them to 
treat them in a manner, suited to the tastes, and notions of the 
crowd. 

Odi profanum vulgus et arceo, 

is a sentiment that they neither avouch, nor act upon. That 
their works may be popular, men of the highest original genius 
bring it out cautiously, and in a diffused form. Their experi- 
ments are timid. Being, in their way, manufacturers, they can- 
not afford to make such as might deteriorate the value of their 
goods. They must not venture on a dish altogether new, they 
confine their powers to the discovery of something that may 
give piquancy to. the old. If the practice be not prejudicial to 
the progress of invention itself, it is fatal to the lasting fame of 
the inventers. The mass keeps swelling, from generation to 
generation, but how, cannot well be noted. This result has, 
however, little to do with our subject; there is another which 
has much. 

It being conceived to be within the compass of talent, to pro- 
cure, in this way, its own reward, genius of the highest order, if 
its productions are not of a sort to bring a price from a book- 
seller, receives now less recompense than even in ages not so 
able to appreciate the benefits conferred by it ; and, from the same 
causes, the propensity to neglect it is greatest where the reading 
public is the most numerous. The promoters of the abstract 
sciences, and the arts, are no where less efficiently aided, than 
in Great Britain. There, the observations of Lord Bacon apply 
nearly as forcibly as ever. “ It is enough to restrain the increase of 
science, that energy and industry so bestowed, want recompense. 
The ability to cultivate science, and to reward it, lies not in the 
same hands. Science is advanced by men of great genius alone, 
while it can only be rewarded by the crowd, or by men high in 


OF THE NATURE OF STOCK. 


217 


fortune or authority, who have very rarely themselves any pre- 
tensions to it. Besides, success in these pursuits is not only 
unattended by reward or favor, but is destitute of popular praise. 
They are, for the most part, above the conceptions of the com- 
monalty, and are easily overthrown, and swept away, by the wind 
of popular opinion.”* 

Without speaking of the sciences, and, in the arts, confining 
our attention to those exertions of the inventive faculty, the bene- 
fits of which, obstructed by no unforeseen obstacle, have been very 
largely felt, how many, even of the most successful of these, 
have been adequately rewarded ? How many of them have 
left their authors in poverty, or brought them to it ! The per- 
sonal history of most men, who, in modern times, have brought 
into being those arts by which human power has been so largely 
advanced, is little else than a narration of misfortunes, and in- 
gratitude. 

Nor are the sweets of success itself, in any department of in- 
vention, even if tasted, uncontaminated by much of bitterness. 
It is chiefly felt at the time, as superiority, on which wait envy 
and flattery. Malice, and insincerity, the great separators of 
man from man, and poisoners of the pleasures of existence, 
follow close after. He who gains it, attains an elevation com- 
manding, but joyless, and unsafe. 

“ Though high above the sun of glory glow, 

And far beneath the earth and ocean spread, 

’Round him are icy rocks, and loudly blow, 

Contending tempests on his naked head. 

And thus reward the toils, which to those summits led.”t 

It is death alone that can give him to the full sympathies of 
his fellows. When the earth wraps her noblest, none any longer 
envy him, all lament the benefactor, no one sees the rival, or the 
master. 

These are circumstances disturbing the course of genius, com- 

* “ Satis est ad cohebendum augmentum scientiarum, quod hujusmodico- 
natus et industriae praemiis careant. Non enim penes cosdem est cultura sci- 
entiarum, et praemium. Scientiarum enim augmenta a magnis utique ingeniis • 
proveniunt ; at pretia et praemia scientiarum sunt penes vulgus aut principes 
viros, qui (nisi raro admodurn) vix mediocriter docti sunt. Quinetiam hu- 
jusmodi progressus, non solum praemiis et beneficentia hominum, verum 
etiam ipsa populari laude destitutisunt. Sunt enim illi supra captum maximae 
partis hominum, et ab opinionum vulgarium ventis facile obruuntur et extin- 
guuntur.” 

t Childe Harold. 


28 


OF THE NATURE OF STOCK. 


218 

ing mainly from misapprehensions from without ; there are others 
flowing from weaknesses, and imperfections, within. 

There are, in every society, rules of conduct, and practices of 
life, which the progress of events has gradually marked out, and 
general observance hallowed. Of these, some are founded on 
the principles of morality and religion, some on caprice, some on 
prejudice. The breaking of any of them is always esteemed a 
crime against society, and in reality is so ; the observance of 
them constitutes a character, in public estimation, perfect. The 
mere man of society, that is, the man of merely imitative action, 
learns them all uninquiringly, and diligently : they make up in- 
deed, almost all he knows, and all the interests of himself and 
family requires he should know, of right and wrong. If he 
transgress them, it is secretly, and cautiously. He makes amends 
by unscrupulously, and unsparingly gratifying, whatever is not 
forbid by the letter of his code, or by his own convenience. The 
inquirer into principles, again, takes a wider range, it is not the 
morality or religion of Italy, of France, of Britain, of North 
America, after which he seeks, but religion and morality in gen- 
eral. He attempts to learn, not what is delivered, but what is. 
The consequence is, that, while the mere man of the world 
is never at a loss, but proceeds securely in the direct path to 
general approbation, the' man of speculation very frequently 
wanders from it. To say nevertheless, either that he knows not 
what is good or fit, or that he is not desirous of observing it 
were untrue. The eye of the rider glances over hill and 
dale, marks the streams, the woods', the hamlets, that diversify 
the prospect, and the whole configuration of the country he 
traverses, and so he knows the road. The animal he rides 
knows it too ; he knows it as giving exercise to his limbs, and 
bringing him, by every step he makes, forward, or right, or left, 
nearer to some stable-door. Ten to one, that, practically, the 
latter has a more accurate knowledge of it than the former, and 
that, while the irrational shall sagaciously and unhesitatingly 
follow it out, without missing a single turning, or making one 
blunder, the rational, especially if the fancy take him to pre- 
serve something of a straight line, shall have to pass from track, 
to track, to leap many a hedge and many a ditch, and having 
been obliged after all, to make detours in abundance, come out 
at last weary, jaded, and bemired. 


OF THE NATURE OF STOCK. 


‘ 2 19 


The ills, which men of genius thus occasion and endure, from 
seeking for their rules of action, altogether from the relations, 
which they perceive they have to the general system of human 
society, without sufficiently regarding those, which necessarily 
connect them to the little system of some particular society, are 
merely errors in the actual course pursued, not in the motives 
from which that course was adopted. There are others more 
fatal, coming, not from mistakes in action, but from errors in the 
motives to action, and from the imagination that it may be allow- 
able willingly to do a small evil, if a large amount of good fol- 
low it. This is unquestionably a moral error, to which men of 
high powers must, from the consciousness of these powers, be 
peculiarly liable. It were painful to bring forward instances of 
their succumbing to the temptation.* 

It is thus that a power, which seems to be at first wakened to 
lile, and to draw its earliest aliment, from the promptings of 
strong desires in man, to unite himself extensively with his fellow 
men, to exist with them, and for them, rather than in himself, 

« * i *■' - 1 

* It is strange that Cicero, as in the following passage, should seem to coun- 
tenance this most common and dangerous of moral sophisms. “Quid? si 
Phalarim, crudelem tyrannum et immanern, vir bonus, ne ipse frigore confi- 
ciatur, vestitu spoliare possit ; nonne faciat ? Haec ad judicandum sunt facil- 
lima. nam, si quid ab hoinine ad nullam partem utili, turn utilitatis causa de- 
traxeris : inhumane feceris, contraque naturae legem : sin autem is tu sis, qui 
multam utilitatem reipublicae atque hominum societati, si in vita renianeas, 
afferre possis, si quid ob earn causam alteri detraxeris, non sit reprehenden- 
duin. — Communis utilitatis derelictio contra naturam est, est enim injusta. 
itaque lex ipsa naturae, quae utilitatem hominum conservat et continet, de- 
cernit profecto, ut ab homine inerti atque inutili, ad sapientem, bonum, for- 
temque virum transferantur res ad vivendum necessariae : qui si Occident, 
multum de cqmmuni utilitate detraxerit.” — De Officiis L. III. 

Such reasoning, followed fairly out, would not stop until it assumed the 
form which Sir Walter Scott has given it, in the speech of Anselmo. 

“ You are to distinguish, my son, replied the alchymist, betwixt that which 
is necessarily evil in its progress and in its end also, and that which being 
evil, is, nevertheless, capable of working forth good. If, by the death of one 
person, the happy period shall be brought nearer us, in which all that is good 
shall be attained, by wishing its presence, — all that is evil escaped, by de- 
siring its absence, &c. If this blessed consummation of all things can be 
hastened by the slight circumstance, that a frail earthly body, which must 
needs partake of corruption, shall be consigned to the grave a short space 
earlier than in the course of nature, what is such a sacrifice to the advance- 
ment of the holy millenium.” — Kenilworth c. XXII. 

A living author, in the character of Eugene Aram, gives also a striking- 
picture of the dangerous tendency of the same sophistry. 


220 


OF THE NATURE OF STOCK. 


as it gathers strength, and predominates in any individual, gen- 
erally renders him so dissimilar to other men, in his feelings, 
habits, motives, and modes of action, that it in a great measure 
separates him from them. Whatever he may be, or may hope 
to be as an inventer, or author, as a man he is misconceived 
and misapprehended. Among the men with whom he lives, 
he lives as not of them, a magic circle is drawn round him 
which neither he can pass without, nor they, within. Like the 
attractive and repulsive powers, which one magnetic influence 
communicates to matter of the same sort, the different direction 
in which the great moving and cementing principle of society 
has been made to flow in him, and in them, incessantly repels, 
and keeps him at a distance from them. 

This disjunction and isolation affect various natures variously. 
Some cannot endure it ; they cannot live but in the constant and 
intimate sympathy and communion of their fellows. They feel 
all the loneliness, and little of the grandeur of the desert. They 
pant for the land of life, and either turning to it, are lost in it, 
their former existence being remembered but as the wanderings 
of a dream ; or they perish, from their incapacity to mingle with 
it. Their finer and gentler natures fed, but not strengthened by 
contemplation, recoil from the coarse and boisterous spirits, with 
whom they are brought into contact. They sink in the conflict 
and pass from life itself, 

“ A precious odour cast 
On a wild stream, that recklessly sweeps by ; 

A voice of music uttered to the blast, 

And winning no reply.” 

To others of firmer mould, the action of these alternately 
attracting and repelling powers, the passing from one state of 
being to another completely opposite, from the turmoil of spirit 
excited by braving and bearing back a world opposed, to the 
concentration of contemplative solitude, though wasting, is in- 
vigorating. Like steel which is first made to glow in fire, and 
then plunged in water, the fineness of their temper is brought 
out by the play of opposing elements. It is observed by Mr. 
Moore, in his life of Lord Byron, that but for the opposition he 
encountered, the noble poet had never stood forth in might ; that 
persecution found him, as Rousseau, weak, left him strong. 

Some, again, the world without affording no resting place, en- 


OF THE NATURE OF STOCK. 


221 


trench themselves in the world within. Their excursions out- 
wards, are carried on, as into a country permanently hostile. To 
insult, to attack, to overthrow, not to subdue, or establish, is their 
aim. These are the skeptics, men seemingly abandoning every 
other hope but that of making manifest their power, a power 
that has often been greater than they themselves have conceived, 
and which, doubtless, would many times have been more happily 
exerted, had they found themselves in happier circumstances. 
When we read, for instance, the speculations of Hume, we do 
not always recollect that he had been a needy dependent brother 
of a scotch land-holder, had failed in the only attempt he had 
ever made to establish himself in the world, by entering on busi- 
ness, and had come to middle life, known only as a bookish re- 
cluse, unable to do good, and only to be tolerated, because he 
was too inoffensive to do harm to any one. Such an existence 
may well account for much of that shrinking within himself, that 
absence of all heart, that habitual distrust, rather rejoicing to 
overthrow, than hoping to establish, which characterize his phi- 
losophy. Who can tell how great haS been the influence of 
that philosophy, in producing what has been, what is, and what 
is to be, in Britain, and in Europe ? Of this we may be assured, 
that they are least aware of it, who are most affected by it. 

There are yet others of higher minds, who, through hopes 
disappointed, and errors committed, over the waste of the world, 
and the ruins of their own hearts, can look confidently and cour- 
ageously forward, to a brighter, though far distant prospect. It 
is in this spirit that Lord Bacon bequeaths his fame to posterity, 
and it is through it, that he, who has been to us so notable a 
benefactor, yet holds converse with us. The manly and gener- 
ous confidence with which he relies on the better parts of human 
nature, and, in the midst of so many discouraging circumstances 
looks forward to the ultimate reign of truth and happiness, con- 
stitutes indeed, I may be allowed to remark, no small part of the 
charm, and perhaps of the utility of his speculations. 

But, however-, the opposition between men of practice, and 
men of speculation and invention may operate, it certainly exists, 
and there are perhaps few of the latter, who have been gifted 
with dispositions so happy, or fallen in times so fortunate, as not 
to have experienced some of its evils. Nevertheless, if the 
view which has been presented be correct, this opposition between 


222 


OF THE NATURE OF STOCK. 


the two classes, the one engaged in the application of what is 
already known to the production of the means of supplying 
future necessities or pleasures, the other, in the discovery of some- 
thing yet unknown and which may serve the same purposes, 
arises, not so much from a difference in the motives to action, as 
from a diversity in the modes of action, and the principles of our 
nature exciting to the advance of invention, would seem to be 
nearly identical with those giving activity to the effective desire 
of accumulation. 

The difference between the two is rather in degree than in 
kind. He who labors to provide the means of enjoyment to 
wife, children, relations, friends, pursues an end in some degree 
selfish. It is his own wife, his own children, his own relations, 
whom, he desires to benefit. The fruits of the labors of genius, 
on the contrary, are the property of the whole human race. On 
this account, though, in the individual, manifestations of the in- 
ventive faculty imply a superiority in some of the intellectual 
powers, they rather imply, in the society, a preponderance of 
the social and benevolent affections. It is this general acuteness 
of moral sensation, and lively sympathy consequently with the 
pleasures arising to the individual, from the success of exertions 
for purposes of general good,* that can alone excite, and nourish, 
the enthusiasm of genius. 

But, though there are two of the circumstances giving strength 
to the principle of accumulation, on which the progress of the 
inventive faculty is equally dependent, there are yet a set of 
causes, the effects of which, while they paralyze the exertions of 
the one, rouse the other to activity. Whatever disturbs, or 
threatens to disturb, the established order of things, by exposing 
the property of the members of the society to danger, and di- 
minishing the certainty of its future possession, diminishes also 
the desire to accumulate it. Intestine commotions, persecutions, 
wars, internal oppression, or outward violence, either, therefore, 
altogether destroy, or, at least, very much impair the strength of 
the effective desire of accumulation. On the contrary, they 
excite the inventive faculty to activity. The excessive propen- 
sity to imitation, which is natural to man, seems the only means 
by which we can account for this diversity of effects. Men are 
so much given to learning, that they do not readily become dis- 
coverers. They have received so much, that they do not easily 


OF THE NATURE OF STOCK. 


223 


perceive the need of making additions to it, or readily turn the 
vigor of their thoughts in that direction. “ They seem neither 
to know well their possessions, nor their powers ; but to believe 
the former to be greater, the latter less, than they really are. 5; * 
Whatever, therefore, breaks the wonted order of events, and 
exposes the necessity, or the possibility, of connecting them by 
some other means, strongly stimulates invention. The slumber- 
ing faculties rouse themselves to meet the unexpected exigence, 
and the possibility of giving a new, and more perfect order to 
elements not yet fixed, animates to a boldness of enterprise, which 
were rashness, had they assumed their determined places. Hence, 
as has often been remarked, periods of great changes in king- 
doms or governments, are the seasons when genius breaks forth 
in brightest lustre. The beneficial effects of what are termed 
revolutions, are, perhaps, chiefly to be traced, to their thus 
wakening the torpid powers ; the troubling of the waters they 
bring about, undoes the palsy of the mind. 

On this account courage distinguishing well between things 
difficult and things impossible, and calmly estimating them not 
as they appear to vulgar prejudices, but as they are, seems to be 
a necessary element in the composition of genius of a high order. 
Without the possession of such a faculty, it is impossible clearly 
to discern the things which changes have brought to light or pro- 
duced, or to make free use of them. The comparison which Lord 
Bacon makes between Alexander the Great and himself, is far 
from being forced. Neither could have accomplished what he did, 
had he not been able to despise what had only a vain show, and 
to discover and trust to real though underrated powers.f 

Besides the circumstances determining the progress of inven- 


* Novum organum. 

t Atque hac in parte nobis spondemus fortunam Alexandri Magni : neque 
quis nos vanitatis arguat, antequam exitum rei audiat, quae ad exuendam om- 
nem vanitatem spectat. 

“ Etenim de Alexandro et ejus rebus gestis JEschines ita loquutus est : 
Nos certe vitam mortalem non vivimus ; sed in hoc nati sumus, ut posteiitas 
de nobis portenia narret et praedicet : perinde,ac si Alexandri res gestas pro 
miraculo habuisset. 

“ At aevis sequentibus Titus Livius melius rem advertit et introspexit, atque 
de Alexandro hujusmodi quippiam dixit: Eurn non aliud quam bene ausum 
vana contemnere. Atque simile etiam de nobis judicium futuris temporibus 
factum iri existimamus : Nos nil magni fecisse, sed tantum ea quae pro magnis 
habentur, minoris fecisse.” 


224 


OF THE NATURE OF STOCK. 


tion arising from the nature of man, the inventer, there are others 
depending on the modes on which the principles of that nature 
are excited to exert themselves in this sphere of action, and 
gradually to discern and develope the qualities and powers, of 
the various divisions of the material world. 

The surface of the earth presents a vast variety of materials. 
Soils, climates, minerals, vegetables, the fish of the waters, the 
birds of the air, and the beasts of the field, are endlessly diversi- 
fied, and, could we bring back the surface of the globe to the 
state in which it existed when man first made his appearance on 
it, we should probably scarcely find any two points in all respects 
alike. 

This diversity of materials seems to have been the great ex- 
citing cause to the progress of art and science, men having been 
every nowand then compelled or induced to adopt new materials, 
and, as they changed from the one to the other, to have been 
gradually led from the knowledge of the most simple and obvi- 
ous qualities, and powers, to a perception of those which are 
more complex, and difficult to discern. 

Tracing any invention upwards to its first beginnings, we shall 
discover, that these have been exceedingly rude and imperfect, 
proceeding from the simplest, and what would seem to us, the 
most obvious observations ; and that it has advanced towards 
perfection, by having been led to change the materials with which 
it originally operated, and passing from one to another, has at 
each step of its progress discovered new qualities and acquired 
new powers. 

I believe a lengthened inquiry into the history of inventions 
would lead to the following conclusions : — 

1st. Arts change materials. It having become difficult or 
impossible for men to obtain the materials with which they had 
been accustomed to operate, they have been led to adopt others, 
and, retaining the knowledge of the qualities and powers of the 
old, have added to them those of the new. 

2d. Different arts adopt the same materials. Men have been 
encouraged to operate with new materials, from materials being 
presented to them, evidently better suited to their purposes than 
the old, could they be made submissive to their art. 

3d. The operation of these'circumstances, has slowly dimin- 
ished the propensity of mankind to servile imitation, and given a 


OF THE NATURE OF STOCK. 


225 


beginning to science, by bringing to light the qualities and pow- 
ers common to many materials ; the general principles of things. 

The limited objects of the present inquiry, however, forbid 
our entering into the lengthened train of speculation, that would 
be necessary fully to establish these conclusions by an adequate 
investigation of the progress of inventions. I shall content my- 
self with adducing a sufficient number of instances to show, that 
this continual change has been a circumstance operating very 
beneficially and efficiently, in enlarging the bounds of human 
knowledge and power. 

When men are deprived of the materials with which they 
used to operate in the production of necessaries, and between 
them and want have only such as are similar, but not the same, 
one of two things must happen. They must either conquer the 
difficulties of the new matter, or must perish. In the earlier 
ages of the world, it is scarce to be doubted, that the latter event 
was of not unfrequent occurrence. Tribes forced from their 
homes by more powerful tribes, must have been often led by hope, 
or driven by despair, into regions that had not before yielded to 
the dominion of man. But, the materials which different regions 
present to human industry, are very seldom precisely alike. The 
new would differ from the old, in being in some respects worse, 
in others better adapted to its purposes, than they. The difficul- 
ties are much more apparent than the benefits, the former having 
generally to be overcome, before the latter be apprehended, or 
distinctly perceived. The attempt, then, would probably never 
be made, but for the promptings of necessity. Its success has 
two advantages. The subjection of the obstacles carries the 
inventive faculty a step farther forward ; the larger returns made, 
owing to the circumstances in which the new material is superior, 
increase the rewards of industry. As the success of the attempt 
would advance the skill and the power of those who made it, so 
its failure would abandon them to famine. In the former case, 
the individuals whose intelligence and courage overcame the 
obstacles, would be exalted by posterity into gods, and demi- 
gods, in the latter, the field would remain open to more success- 
ful essays, in other times, and by other races. An inquiry, 
however, into the progress of the arts essential to the. existence 
of man in any form of society, would carry us back to ages too 
remote, and involved in an obscurity too deep to penetrate. 

29 


226 


OF THE NATURE OF STOCK. 


None of the arts which are not necessary to the preservation 
of human existence itself, has probably had greater influence on 
the modes which that existence has assumed, than metallurgy. 
Without the metals, it would be impossible for the series of in- 
struments to be continued from which the wants of civilized 
society are supplied, and without them, consequently, mankind 
could never have emerged from barbarism. There are few arts, 
either, in which the processes have probably at first been more 
rude, in which they have ultimately attained greater perfection 
of skill, or in which the progress has been more gradual, and 
more dependent for its advance on the variety of the materials 
operated upon. Some metals are found in quantity pure, the ores 
of some are easily reduced, of others with great difficulty. Of all 
the substances he attempts to classify, none, from their number and 
variety, give greater trouble to the mineralogist. The discovery of 
the qualities of such portions of these metals as were found pure, 
would soon make them be considered as the most useful of substances, 
and occasion their being sought after with avidity. The supply 
of them in this state being exhausted, or they who had employed 
them moving into regions where they could no longer be found, 
recourse would gradually be had to the more pure and more 
easily reduced ores, and from thence to metals, and ores wrought 
with greater difficulty. Thus we find that gold, silver, and copper, 
the metals that most frequently occur native, were those first in 
use ; iron came last, and was probably then esteemed the most 
precious. Weapons of gold and silver were edged with it, in 
the same manner as were wooden implements, such as the old 
English spade, in more recent days. But for the gentleness of 
the ascent, it is altogether likely, that the art would never have 
attained the eminence it has gained. Had the earth, for instance, 
possessed no metallic stores but the more abundant ores of iron, 
by far the most useful in the present days, it seems not unlikely, 
that no metal would ever have been wrought. The steps by 
which it rose, were, however, too numerous, and the vestiges 
left of them are too indistinct, for me to attempt here to trace 
them, were I even prepared so to do. I prefer rather, in illus- 
tration of the subject, to refer to an art which has been in prac- 
tice for thousands of years, and to an implement in daily use. 

The plough, in its most simple form, is an instrument, the in- 
vention of which would naturally follow the domestication of the 


OF THE NATURE OF STOCK. 


227 


ox species. Men accustomed to loosen, and stir the earth, with 
the inefficient implements of that ancient period, could scarce in 
time, fail to remark, that the sluggish strength of this animal 
might aid them in the operation. They seem to have turned it 
to this purpose, by a very simple contrivance. A long crooked 
sapling, similar to the clubs used by boys in some of their games, 
but larger, had its thick, curved end, sharpened to a point, and 
its other extremity attached to something like what is now called 
a yoke, coupling two oxen by the neck. The long straight part 
of the implement, passed between the animals, the part turned 
downwards rested on the earth behind them, and when they 
moved forward, along soil very easily impressed, would mark it 
with a furrow, which might be deepened by a man walking close 
after, and pressing it downwards. He was assisted in this ope- 
ration, by the addition of a handle projecting upwards, the point 
was hardened by the action of the fire, and another person guided 
the oxen. Such was probably the earliest plough, and those that 
are used in many parts of the east, to this day, differ not much 
from it, with the exception of the point being defended by a sort 
of iron tooth, and the wood not having a natural, but an artificial 
curvature. In Java, a man, when he has done his day’s work, 
carries home his plough on his shoulder, as a woodman does his 
axe. The defects of such an implement are to us very plain. 
It only scratches the soil, it cannot make what we call a furrow, 
and it is only very light, sandy soil, or the sort of mud, in which 
rice is cultivated, on which it is at all capable of acting. As the 
quantity of this sort of soil is, in all parts of the world limited, 
men were gradually forced to attempt the tillage of land more 
difficult to subdue. Over the greater part of Asia, they have 
done so, by a simple enlargement and strengthening of the first 
rude implement. The model immediately before their eyes 
seems to have so confined their powers of invention, that they 
attempted no change but this. In that part of the world, if we 
except China, and the countries bordering on Europe, the earth 
is consequently scratched, or at best stirred, it is not in our sense 
of the word ploughed. The improvements which we have made 
in the operation are two fold ; the first concerns the effect pro- 
duced on the soil, and the second, the ease with which it is pro- 
duced. The furrow we form makes each portion of soil operated 
upon, describe about one third of a circle, thus blending all the 


228 


OF THE NATURE OF STOCK. 


parts of the surface together, leaving it very open, and placing 
the vegetable fibres in the position best suited to induce decay. 
The turn too, thus given, to each portion, puts it out of the way 
of the next, which is therefore, with comparative ease, moved 
into its proper position. 

It seems not to have been, until the instrument got to Europe, 
that it assumed a form capable of executing such an operation. 
Such was probably the Roman plough, the wood-work of which 
is thus described by Virgil. 

“Continuo in sylvis magna vi flexa domatur 
In burim, et curvi formam accipit ulmus aratri, 

Huci a stirpe pedes temo protentus in octo, 

Binae aures, duplici aptantur dentalia dorso. 

Cseditur et tilia ante jugo levis, altaque fagus, 

Stivaque, quae currusa tergo torqueat imos ; 

Et suspensa focis explorat robora fumus. 

“ An elm bent with great strength in the woods, is forced into 
a buris and receives the form of the crooked plough. To it 
are fitted the temo stretched out eight feet from the lower end, 
the two aures , the dentalia with the double back, and the stiva 
which bends the lower part of the plough behind. The light 
elm tree is fitted beforehand, for the yoke, and the lofty beech 
for the other parts, and the smoke seasons the wood hung up 
above the fire.” # 

I see not that this buris, which has given some of the 
commentators a little trouble, can be any thing else than the 
original crooked sapling, here swollen to a large elm knee, form- 
ing the body of the plough, “ inflexi grave robur aratri, and 
to which, all the other parts are appended. From it, instead of 
the longer straight part of the sapling, stretched forward, a sepa- 
rate piece, termed the temo or pole, and the stiva, or handle, was 
retained. So far there was very little difference from the ori- 
ginal instrument, but in the aures, the ears, we have the begin- 
nings of the mould board, and there is a place for the reception 
of the vomer, the large cutting iron share. These appendages, 
the more difficult soil of some parts of Italy probably introduced, 
and when adopted in one part, they could scarce fail to spread 
over it all. 

The plough thus changed into an instrument for turning over, 
* George I. 170. translated by Dickson, ancient husbandry. 


OF THE NATURE OF STOCK. 


229 


not merely stirring the soil, was carried by the Romans into 
other, and more northern regions, and transmitted to other races. 
These and subsequent revolutions, obliterated the imitation of 
the original curved sapling. The curve became an angle, form- 
ed by a short downright beam or pillar, the sheath or forehead, 
fitted into the shortened pole or temo, and bearing, as before, the 
chief stress of the draft. Greater symmetry and lightness were 
thus given to it. The mould board gradually attained its present 
form, the coulter and another handle were added. In recent 
days, it has been made nearly altogether of iron. In Britain, 
where this revolution in the material was introduced, it is de- 
serving of notice that the metal implement, only that its parts 
are slenderer, is an exact copy of the wooden one. There is 
yet too the sheath. In some, at least, of the American iron 
ploughs, the sole connexion between the upper and lower parts, 
unless that given by the mould boards themselves, is a strong 
bolt screwing tight. For a plough of such materials, this last 
metamorphosis of the original sapling or buris, would seem the 
better construction. 

Thus, the moving of this implement from one region and 
people to another, the consequent adaptation of it to different 
and more difficult soils, and the change of the materials of which 
it is formed, seem to have been the occasions of its successive 
improvement. They have stimulated the faculty of invention, 
and weakened the propensity to servile imitation. The instru- 
ment, so changed, it may be remarked, is on its return to coun- 
tries in which, perhaps, it first assumed form. English ploughs 
are to be seen in India, and some modification of them, must, in 
time, become the general plough of the country. 

Our next example, of the effects of these circumstances on 
the developement of the inventive faculty, will be taken from the 
progress of sacred architecture. It conspicuously exhibits the 
strength of the principle itself, and the trammels by which its 
energies are sometimes confined. 

When men worship the deity, they find their devotional 
dispositions assisted by the presence of external objects, par- 
taking of his attributes. Thus, whatever brings sensibly be- 
fore us the ideas of very great power, and unlimited duration, 
fills the mind with thoughts that are very near akin to devotion. 
Hence, men in almost all ages and countries, have either made 


230 


OF THE NATURE OF STOCK. 


choice of particular natural objects, inspiring such ideas, as con- 
comitants of their devotions ; they have worshipped turning to 
the sun, or in groves, or on the tops of mountains ; or they have 
formed things, having in their conceptions a sort of unison, in 
this way, with the object of their worship. 

Of all the people who have employed themselves in forma- 
tions of this sort, and devoted a portion of their industry to the 
construction of instruments serving, in some degree, to satisfy 
those natural longings of the human mind after something bring- 
ing before it the perfections of the deity, none have been more 
eminently successful than the Egyptians. The suddenness with 
which the art there attained an excellence, that even now com- 
mands our fullest admiration, is a phenomenon well deserving 
the attention of speculators on the extent ef the human powers 
when roused to free and active exertion. 

Several circumstances seem to have contributed to determine 
the form, which architecture there assumed, and to carry it at 
once from infancy to maturity. 

One of the manifestations of power most apt to attract the 
notice of men in the early stages of society, as very great, is the 
moving of large blocks of stone. To men altogether ignorant 
of the mechanic powers, however strong and numerous, to move 
a cubic stone of the weight of only two tons would be impossi- 
ble ; for, enough of them could not get hold of it. To men 
again, having made a progress in art, aware of the advantage, 
for instance, of the lever, though it might be practicable to move 
into an upright position, pillars of even a few tons weight, such 
objects would seem very striking displays of power. They 
would also impress them with the ideas of extended duration, 
which the indestructible nature of the material, is calculated to 
produce. Accordingly we find that the erection of such columnar 
masses, has been a very common act of men, in rude states of 
society, in their efforts to draw themselves near to some concep- 
tion they have had of the great first cause. 

But it is not mere blind power, and eternal duration, that is 
attributed to the deity, besides this, all men ascribe to him un- 
erring wisdom, and most men, boundless benevolence. Regu- 
larity of design, then, especially if combined with visible utility, 
renders any object of great and changeless power, more fitting 
to inspire religious sentiments. On this account the sun, of all 


OF THE NATURE OF STOCK. 


231 


objects continually before our eyes, is that most generally turned 
to with religious feelings. 

Symmetry of design may be given to collections of columns, 
by preserving them at regular distances, and forming them into 
circular, or straight lines. The circles of the Druids in Scotland, 
and in other parts of Europe, are examples of this sort of form. 
Greater unity would be given to an erection of this sort, by the 
addition of horizontal pieces, stretching from the top of the 
one pillar to that of the other, and partially roofing in the fabric. 
Such an addition would also heighten the motion of power em- 
bodied in the work. The poising large masses of stone on the 
summits of elevated columns, must have appeared a stupendous 
exertion of power, to those who first contemplated it. Such 
seems to have been the character of the famous druidical temple 
of Stonehenge. A form similar to this, would therefore seem 
likely to be that, which the ancient Egyptians must have been 
inclined to give the religious edifices they constructed, when 
leaving the higher grounds, they began to descend and occupy 
the plains, and such is, in fact, the general outline which the ruins 
of their edifices yet present. But they possessed arts, which 
enabled them to give their edifices a degree of grandeur, far 
superior to the rude structures of the ancient Britons. 

They were probably either themselves workers of stone, or 
had the means of knowing how stone may be wrought. The 
more ancient Troglodytes were perfect in the art of cutting stone. 
Their labors were confined, however, to forming excavations in 
rock, they do not seem to have ever thought of dividing these 
rocks into fragments, and again reuniting them into some required 
form. Indeed, this is an idea, that could not very readily occur 
as a means of facilitating the formation of structures of the sort. 
Here, as in other instances, the beginnings of art are simple, but 
laborious. It is invention that abridges the amount of labor 
necessary for attaining the end, and substitutes skill and contriv- 
ance, for toil and perseverance. A sort of necessity, brought 
about by the occupation of a new region, and the desire to have 
rocky edifices on the alluvial plane, probably led the Egyptians 
to effect this revolution. 

The possession of another art, made it of less difficult execu- 
tion. Egypt, a long level valley periodically overflowed, afford- 
ed peculiar facilities for the transport by water, of even the 


232 


OF THE NATURE OF STOCK. 


heaviest articles. The largest masses separated from the rocks 
that bordered the great canal, into which it was transformed dur- 
ing the time of the inundation, had only to be moved to rafts 
stationed close by, when they could be transported to any required 
situation. The riches also of that celebrated valley, then proba- 
bly recently exposed to human industry by the retiring waters, 
and which the efforts of fifty centuries have not yet exhausted, 
gave the inventive faculty as its instrument, an almost unlimited 
command of labor. Genius was not wanting to reach lofty con- 
ceptions, or to apply the means put in its hands so as to give them 
an adequate form. The works it produced, were the admiration 
of antiquity, and are the astonishment of modern times. 

Architecture, with the other arts of Egypt, was carried to 
Greece. It retained, nevertheless, the same essential character, 
the effects it produced arising from the magnitude and propor- 
tions of massive blocks, arranged in columns and transverse pieces. 
A comparison of the two, does not give the one much superiority 
over the other. Both possess sublimity and unity of design, 
and beauty of execution, and if the Grecian has greater elegance, 
the Egyptian has greater grandeur. But if the colony did not 
much excel the parent country in architecture, there is no 
comparison between them in the sister art of sculpture. Archi- 
tecture and statuary were combined by the ancient Egyptians. 
The earliest human figures cut in stone, that have come down 
to us, are those executed by them, on their columnar fabrics. 
They represent the human body, in one position. The arms 
close to the trunk, the legs close to each other, the back 
applied to the block, of which the statue is a part. This 
position of the body forms evidently the most easy design, 
which a novice in the art, when first attempting to shape in 
stone some representation of the human figure, could conceive. 
That the Egyptian artists should have commenced with such 
figures, seems natural enough, but that, after having learned 
to execute the prodigious and highly finished works in statu- 
ary, which they have left, they should still have adhered to 
this position, can only, I apprehend, be explained from the in- 
fluence of the spirit of imitation. The achievements of the 
ancient Egyptians, in the whole art of shaping stone into forms 
giving the ideas of sublimity and beauty, may well be supposed 
to have filled the minds of their descendants with awe and admi- 


OF THE NATURE OF STOCK. 


233 


ration, since their remains so powerfully affect even men of the 
present day with these sentiments. It is scarcely in human 
nature greatly to admire any productions of genius, and to form 
others much surpassing them. Under the influence of such a 
sentiment, men are rather inclined to confine their efforts to 
making additions, than to exert them in attempting alterations, 
prudence whispering, that the former will be received as sufficient 
proof of their capacity, while the latter might be censured as 
proceeding from their arrogance. When a certain point has 
once been gained, future artists seek the principles of their ope- 
rations, not in the powers of nature and of man, but, in what 
they term the rules of art. These rules seem to have » effectu- 
ally confined the art of statuary, as far as the human figure was 
concerned, to the limits marked out by the first essays. Even 
figures in porcelain had the same character, an appendix being 
put to the back, indicative of the original stone block. The 
restraining influence of the spirit of imitation, is rendered more 
remarkable, from the figures of the inferior animals being execut- 
ed with considerable spirit. 

When the art was transferred to Greece, the change of coun- 
try undid its trammels, and its productions assumed all the life, 
grace and beauty, which varying and natural attitudes bestow. 

The mechanical part of architecture underwent a revolution 
among the nations that were finally consolidated into the Roman 
Empire, by the adoption of the arch, and the employment of 
cement. The Egyptians and Grecians were stone-cutters ; the 
Romans, masons. The spirit of imitation prevented this change 
in the material part, from producing, immediately, a correspond- 
ent change in the ideal. Under the Romans, the arch and the 
column were combined. It was not until after the ruin of the 
Empire, when architecture recommenced among other races, that 
it assumed a new form, correspondent to the change in the 
mechanical part, and suited to the purposes and times. 

When arts, other than those of their native wilds, first began 
to be any thing to our rude ancestors, the art of the mason, re- 
ceived by them from the Romans, was properly the capacity of 
shaping a stony mass into a form, realizing some of their ima- 
ginations, from materials, which could be easily transported to 
the point required. While the Egyptians and Grecians had had 
to apply their powers to changing the figures and positions of 
30 


234 


OF THE NATURE OF STOCK. 


masses of rocks, they possessed the art of constructing a rocky 
mass. The instrument of the former was the chisel, to carve 
into shape, of the latter, lime, to work out to shape. The be- 
ginnings of the former art in Africa, and of the latter in Europe, 
are marked by the same lavish expenditure of human labor, 
though in different modes. In the former, the human hand, 
slowly, by dint of strokes intermitted not for generations, dug 
out caves, or carved pillars. In the latter, also, the human hand 
cemented small fragments of rock to small fragments, till in the 
lapse of years, the mass gradually swelled out into some desired 
form. The extent of the operations of the one was limited, 
by the powers of industry, to put large blocks and columns of 
stone into the requisite positions, and by the strength and dura- 
bility of these materials. The operations of the other again, 
were limited, solely, by the cohesive qualities of the mass it 
formed. The effect at which both aimed, grandeur, the union 
of power, durability, and useful design, was mainly produced in 
the former, by the vastness and symmetry of the several parts, 
in the latter, by the same qualities combined in a whole. 

The art was probably at first applied in modern Europe, to 
the construction of places of strength. Solidity to resist the 
battering engines, height to prevent the fortress being scaled, and 
the advantage of having scope to annoy the besiegers, produced 
the massive battlemented towers and castles of the ancient 
barons. As its materials were the most durable, principles to 
which we have already adverted, soon led to its application to 
structures devoted to the purposes of religion. 

A plain wall of small stones and lime may convey the idea of 
durability, but only in a slight degree, that of power or design. 
A circular or angular column of the same materials, if very ele- 
vated, is better fitted for these ends, but still, is far inferior to one 
composed of a solid block. A lofty stone arch, again, is one of 
the most striking displays of power that human art exhibits. 
The aspect of a mass so ponderous, hanging thus securely in 
high air, fixes the attention, and fills the mind with awe. It is, 
accordingly, by a skilful management of the arch, that the gran- 
deur of effect of what we term the Gothic architecture, is chiefly 
produced. All the other parts are subordinate to it, and confined 
within the smallest limits sufficient to bring out its powers. In 
the more perfect specimens, there is no dead wall ; a congeries 


OF THE NATURE OF STOCK. 


235 


of lofty arches, supported on short, or slender pillars, is wrought into 
a magnificent and beautiful whole. The feeling of admiration here 
springs from the consideration of the power manifested, in main- 
taining in its place the whole high and hanging fabric ; whereas, 
in the Grecian architecture, it rather arises from a perception of 
that displayed in the formation and elevation of each separate 
member. 

The progress towards perfection, of this order of architecture, 
was much more slow, considering that it scarcely ever remained 
wholly stationary, than was that of the Grecian, for it is, in reality, 
far more difficult. Several causes contributed to its advance. 
The great extent of country over which its elements were dif- 
fused, occasioned the use of various sorts of stone, and produced 
the advantageous effects arising from a continual change of ma- 
terials. The art of the mason improved, strength was obtained 
by joining stones into one another, rather than by cementing them 
together. The use of freestone, a rock easily brought into shape, 
probably had considerable effect in producing this improvement. 
The architect was thus enabled to bring out, in greater fineness, 
all the parts of his fabric. The feelings of men, also, set towards 
the pursuit. Kings, nobles, a proud and powerful priesthood, 
stood ready to reward and applaud its successful creations, and 
assembled multitudes gazed on them in silent and delighted 
admiration. It has been truly said, that it formed much of the 
poetry of the age. In the want of other species of intellectual 
excitement, men were needs very strongly moved by an art, that 
thus wrought on stone and lime, they knew not how, to pourtray 
some of the deepest feelings of their hearts. It seems to have 
been only slightly retarded, by a propensity to servile imitation. 
The various kingdoms into which Europe was split, and the dif- 
ficulty of intercourse amongst them, gave courage to the artists, 
who were themselves the greatest travellers, to attempt works 
from which they would have shrunk, had those who were to 
judge of them had easy access r to established models. Never- 
theless, there is a fact, which shows that the oppressive influence 
of this principle was far from inert. The epochs of the most 
rapid advances of the Gothic architecture, were the periods suc- 
ceeding the conquest of kingdoms by new races. This circum- 
stance has given occasion, to several, to conjecture, that it stands 
indebted to the knowledge of its principles, which some of these 


236 


OF THE NATURE OF STOCK. 


conquerors brought with them. The supposition is improbable ; 
we have no reason to believe that they brought any thing else, 
than what necessarily belonged to such men, a bold and untram- 
meled spirit. This, indeed, is an essential element, and one, as 
we have seen, of great power in the composition of genius. It 
was thus, that the prominent defects of the art under the Anglo 
Saxons, an exuberance of dead wall, and want of elevation, were 
remedied by the Normans. The Saracens in Spain, wrought 
also a similar change. 

At no preceding period, did there exist men, so much given 
to the erection of permanent structures as modern Europeans, 
and their American descendants. Their command of materials, 
their resources of power, are by much superior to those possess- 
ed by any antecedent people. It is certainly, then, surprising, 
that they should be servile copyists, of the arts of those whom 
they fitly look on, compared with themselves, as barbarians. I 
apprehend we can only explain the phenomenon, from the influ- 
ence of the instinct of imitation. The extended intercourse 
between all parts of the world, the diffusion of the products of 
book-making, and of picture-making, render us familiar with 
existing models of all sorts. An artist, therefore, who has to 
construct any great edifice, finds it safest to copy from some 
one whose merits have been acknowledged, and takes the measure 
of a Grecian temple, or Gothic church. Thus, at least, he covers 
himself from censure. Hence it is, that we so often see, in the 
cold foggy climate of Britain, or in the boisterous one of North 
America, an imitation of some structure that had been admired 
in Greece. The claims to admiration which the copy possesses, 
fall, however, far short of the original. In the first place, it 
wants that evidence of perfect design, which arises from the 
complete, and easy accomplishment of a purpose. What an- 
swered the mild climate, and serene skies of Greece, is felt to 
be inconvenient, and therefore defective, elsewhere. Next, it is 
most probably a very deficient copy. The effect of the Grecian 
structures, depends, as we have seen, in their consisting of large 
masses of stone. Our imitations are probably the work of the 
mason, or possibly the plasterer, and convey, therefore, no idea of 
power, the very essence which it is desired to embody. There 
is hence, also, generally, a failure in the execution. When the 
mind is full of any great idea, it knows when it has got an ade- 


OF THE NATURE OF STOCK. 


237 


quate expression for it, and rests not satisfied until it has fitly, 
and accurately embodied it. But, if this great presiding idea 
be wanting, there is nothing within, distinguishing the right from 
the wrong, or preventing the commission of the greatest errors. 
Our mason-work and plastered fabrics, are consequently, often 
masses of incongruities. 

Our choice of Gothic models, for similar reasons, generally fails 
as completely. A large cathedral, indeed, must be admired any 
where, but this is too great a work to be attempted. A copy is 
probably taken, from some chapel. We forget, that what was ad- 
mirable for its purpose in SQme small ancient rustic hamlet, is out 
of place in our cities ; that the arches, which, to simple peasants, 
living in huts, seemed magnificent, to the chieftain, issuing for a 
time from his naked fortalice, elegant, must appear mean, and 
insignificant, to those, whose halls are nearly as lofty ; and, that 
the whole pinnacled and buttressed structure, crowded on and 
perhaps overtopped, by square unseemly buildings, devoted to 
meaner uses, shows among them, trifling, and fantastic, like a toy 
erected to please children. 

II. The examples we have hitherto considered, are of the 
same arts changing materials. Those which We have now to 
attend to, are of different arts adopting the same, or similar ma- 
terials. When arts are brought together, they borrow from each 
other. Men perceive that some materials, or instruments, or 
processes, employed in the one, could they be transferred to the 
other, would be the cause of its yielding larger returns. They 
are encouraged, therefore, to attempt the change, and experi- 
ence shows, that such attempts perseveringly pursued, are gen- 
erally successful. 

Efforts of the inventive faculty, succeeding in effecting such 
transfers, are more important than those in which it accomplishes 
simply, a change of materials, for they tend more than they to 
weaken the powers of the propensity to imitation, and establish 
general principles, applicable to all arts. Hence we observe, 
that, in countries where many arts flourish, there are most general 
principles, least servile imitations, and very often, a continual 
onward progress. Barren apart, they show generative virtues 
when brought together. I take it, that it is chiefly from this 
circumstance, that the seats of commerce have been so generally 
the points, from whence improvements in the arts have emanated. 


238 


OF THE NATURE OF STOCK. 


Thus, also, countries where various different races, or nations, 
have mingled together, are to be noted, as coming eminently 
forward in the career of industry. Great Britain is a remarka- 
ble instance of this ; so are the United States of America. When 
individuals meet from different countries, they reciprocally com- 
municate and receive the arts of each, adopt such as are suited 
to their new circumstances, and probably improve several. Ser- 
vile imitation can there have no place, for there is no common 
standard to imitate. Countries again, where only one art is prac- 
tised, and where the population is composed of one unmingled 
race, are generally servilely imitative. Such are some purely 
agricultural countries. Experience shows, that, from the influ- 
ence of this propensity, improvements, in these, always introduce 
themselves very slowly. Leaving, however, these general re- 
flections, we should now turn to particular instances of passages 
in this way, of processes and inventions, from art to art, and 
consequent improvement of old, and generation of new arts. 
But, as these will be chiefly recent, and European, there are one 
or two circumstances, affecting generally their progress in this 
part of the globe, to which it may be as well previously to 
advert. 

The rough and variable climate of Europe, compared with 
the regions that have given origin to most of the arts now pre- 
vailing in it, renders the necessary cost of subsistence much 
greater. To live at all, in most parts of Europe, men must con- 
sume a greater quantity, and better quality of food, or they must 
be more warmly clothed, and comfortably lodged, than in regions 
nearer the equator. The influence of this circumstance, has 
probably been somewhat increased by another. Along the Med- 
iterranean, civilization seems to have gained great part of its ad- 
vance by colonization, and it is to be observed, that this movement 
of men from one region to another, proceeds from different mo- 
tives, than others impelling them to a change of seat. Men are 
often compelled by necessity to migrate in tribes and nations, but 
emigration in small parties, proceeds from choice. 

They cannot well be induced to leave, not only their homes, 
but their kindred and nation, unless from the hope of bettering 
their condition, and, if their project miscarries not, they do in fact 
better their condition, and are indemnified for the pains of emi- 
gration, by a greater command of the necessaries and comforts 


OF THE NATURE OF STOCK. 


239 


of life. Thus habits of larger consumption are introduced, than 
absolute necessity might demand. Both circumstances would 
have the effect of augmenting the expense, or the wages of labor, 
and of creating an additional difficulty, to the passage of the arts 
of warmer climates, into these more northern regions. It is very 
evident, for example, that an European workman could never 
have sat down to a Hindoo loom, for the purpose of fabricating 
a garment to himself ; it would have been much better for him 
to keep to his sheepskin jacket. Before the transfer of any art 
could be effected, invention had to supply it with additional 
facilities. Stimulated by its wants, by the new scenes in which 
it found itself, and by the new materials submitted to it, it accord- 
ingly seems always to have succeeded in doing so. There is, 
perhaps, scarcely an implement, in general use in Africa, or in 
Asia, excepting from it China, that has not passed with improve- 
ment into Europe. 

In modern Europe, too, the strength of the effective desire of 
accumulation, seems to have been always greater, than in any 
other part of the old world. This circumstance has much facil- 
itated the passage into it, of the several arts, and balancing the 
higher rates of wages, and more stubborn materials, has rendered 
the formation of very many instruments there practicable* which 
the weaker accumulative principle of the Asiatics, or Africans, 
would have left unattempted. 

It is worth while to remark, that there is a considerable analogy 
in this particular, between the different conditions of society in 
that continent and Asia then, and what exists between them now, 
in Europe and North America. The general wages of labor 
seem always to have been higher in Europe, than in Asia, in the 
same way as the wages of labor in North America, are now 
higher than in Europe. The same process, too, that carried the 
arts to Europe, seems now aiding their passage across the Atlan- 
tic. As flame often sets against the wind for that it is fed by it, 
so invention seems to hold its course against opposing obstacles, 
for these obstacles excite its powers and minister materials to 
their action. 

The progress of the knowledge of the natures and qualities 
of particular substances, gradually introduced a knowledge of the 
properties and natures of substances in general. Men first see 
in the concrete, afterwards in the abstract. Thus, the discovery 


240 


OF THE NATURE OF STOCK. 


of the several mechanical powers, and the knowledge acquired 
of the nature of each, led in time to the general principles of 
mechanics. A knowledge of the mathematical properties of 
substances, as in land-measuring, and in the regular figures of 
architecture, led to a perception of the general properties of figure, 
or of space as an affection of matter, and, at last, to the doctrine 
of pure space and motion. 

In the ancient world, science, as founded on a generalization 
of the experiences of art, was little prosecuted. It is only in 
modern times, that the science of experience has come to form 
an element of importance, in the general advance of invention. 

It is clearly on the antecedent progress of art, that the foun- 
dation of the hopes of Bacon, for the future progress of science, 
rested. His philosophy may be fitly described, as a plan to reduce 
to method the chance processes that had been going on before, 
by which men, as we have seen, happening on one discovery 
after another, grope their way, as he expresses it, slowly, and in 
the dark, to fresh knowledge and power. The progress of the 
philosophy to which he has given his name, as well as that of 
the science of mathematics, have unquestionably discovered to 
us many general truths, and theorems of art, and form therefore 
a new element influencing its progress. The great moving pow- 
ers will, however, still, I apprehend, be found to proceed from 
the principles, the action of which we are now to attempt farther 
to trace through particular instances. 

Men must have been very early led to the use of some of the 
farinaceous plants, and other vegetable matters, which, before 
they are fit for food, require to be reduced to small fragments. 
To effect this, they must either have rubbed them, or beat them, 
between some two substances. If stone were the ^material, they 
would rather prefer rubbing them, from the liability of that sub- 
stance to break, and from its weight. It is thus that the rude 
tribes of southern Africa, to this day, lay their corn on one flat 
stone, and grind it by the help of another. An improvement on 
this instrument, is to have the lower stone a little hollowed, and 
perhaps marked with transverse notches. In one form or other, 
this is a very general and ancient instrument, and, it may be ob- 
served, is probably the first machine in which a circular motion 
was introduced. 

If wood be the material, then, to produce any effect, the sub- 


OF THE NATURE OF STOCK. 


24 L 


stance to be comminuted must be laid on one piece, and an- 
other be struck against it. But, thus, a large portion of the 
matter operated on would fly off, and be lost. The most natural 
mode of preventing this, is, to hollow out the lower piece. The 
Indians of North America make an instrument of this sort, very 
easily, by taking a portion of the trunk of a tree of hard wood, 
setting it upright, and burning and scraping out a hole in the upper 
end. They have then a large mortar, to which adjusting a 
wooden pestle, they produce the implement with which they 
pound all their corn. Such an instrument seems, like its fellow 
of stone, to have been in very general use, at one time or other, 
in most parts of the world.* 

Tribes having learnt the use of such an instrument, on sub- 
stances most easily comminuted, would be urged on to essay 
its powers on more cohesive matters. They might succeed in 
the attempt, at first, by simply increasing the size of the imple- 
ment, and searching out the hardest and heaviest woods to con- 
struct it of, but, even these improvements would at length be 
insufficient for the enterprizes to which their confidence in their 
powers, or their necessities, might excite them. To overcome 
these increasing difficulties, it would require no great stretch of 
the inventive faculty, to hit on the expedient, of placing a firm 
transverse bar, with a hole in it, for the passage of the handle of 
the pestle, across the top of the mortar, from side to side. Such 
a change in its construction, seems accordingly, to have been very 
generally effected. Simple as it is, it contained the germ of very 
many subsequent improvements. The force employed, acting 
thus not directly, but through the intervention of a fulcrum, may 
be so applied as to give either increased velocity, or increased 
power, and the regulated movement introduced renders mere 
power almost all that is necessary. The size of the mortar, and 
weight of the pestle, might, therefore, be increased indefinitely, 
and the instrument might be put in motion by men, or by cattle. 
The expression of the vegetable oils, was found to be the most 
difficult operation to be performed, by instruments of this sort, 
and it is probable, that it was to effect it, that machinery, by which 

* In a Scotch ballad, I believe, in Allan Ramsay’s collection, containing a 
catalogue of a peasant’s furniture, perhaps two centuries since, “ A timmer 
mell the bear to knock,” is among the utensils enumerated. We yet speak 
of striking barley. 


31 


242 


OF THE NATURE OF STOCK. 


increased force might be employed, was first made use of. Oil 
mills, of this sort, are yet common in the east. 

This construction rendered the union of the wooden mortar 
and pestle, with the parallel instrument of stone, almost inevita- 
ble. Hardness and heaviness, being the requisites in the pestle, 
and an equal resistance being necessary in the mortar, to bring 
about the junction, it would seem to have been only requisite, 
that the two machines should have met where there was a scarcity 
of wood of proper 'quality. The handle of the pestle, through 
which a cross bar was then thrust, became the axle of the upper 
mill stone, and the lower mill stone formed the bottom of the 
mortar. The movement then became altogether circular, and 
required small absolute force, but as much swiftness as could be 
given to it. The machine thus generated, by the passage of the 
one instrument into the other, was then a regular mill, to work 
which was the employment of cattle or slaves. As it united the 
advantages of the two original instruments, the capacity of the 
wood to receive and modify motion, and of the stone to bruise 
and comminute hard vegetable matters, its invention seems to 
have had considerable effect in advancing art still farther. The 
moving power, in one of the most laborious and common opera- 
tions, was thus reduced to a simplicity of action, that paved the 
way for its being performed by an inanimate agent ; such an agent 
was introduced into the process, through the intervention of an- 
other art. 

In hot regions, water is very abundantly consumed, both as a 
necessity and luxury, for immediate use, and as the great fertilizer 
of the soil. In such regions, the raising it from wells and rivers 
has always been a very common and laborious process, and to 
facilitate it has given occasion to some of the earliest efforts of 
ingenuity. One of these consisted of a large wheel, placed up- 
right, and to the circumference of which small buckets were 
affixed. It was put in motion by treading on it, and the buckets 
and it were so so arranged, that they should just dip beneath the 
stream, in the lower part of their circumvolution, and, at the 
height of it, should empty themselves into a reservoir placed 
above. A considerable saving of labor was thus produced. An- 
other improvement did entirely away with the necessity of em- 
ploying it, in many situations. To the outside of the wheel, 
where there was a sufficient current, were affixed broad plates of 


OF THE NATURE OF STOCK. 


243 


wood, or other material, on which the strength of the stream 
acting, forced it round, and performed the office of the laborer. 
Such engines are of common use in China, at present. They 
were known in Italy, in the time of Julius Caesar, to which they 
probably found their way from Asia. They presented to the 
Romans a means of employing the power of water in the labo- 
rious operation of grinding,* which they had sufficient discern- 
ment to adopt. The motion of the water-wheel, was communi- 
cated to the mill, by the intervention of a toothed wheel. 

Thus, from the union of the productions of the inventive 
faculty exercised on at least three arts, came the rude model 
of the present water-mill. Its progress was at first slow. Such 
mills, seem only to have been constructed, when there was a 
current of water suited to the purpose. The expense of form- 
ing artificial falls, seems to have been too great for the improvi- 
dence of the age. Though abundant materials existed, the 
accumulative principle of the people was too weak to work upon 
them. Cattle-mills, and mills driven by slaves, continued there- 
fore to be generally preferred. f It was owing to an invention, 
like so many others, the result of necessity and genius united, 
that the use of water-mills became more general. When Rome 
was besieged by the Goths, in the time of Belisarius, they cut 
off the supply of water by the aqueducts. Among the other 
inconveniences arising from the measure, it stopped the mills 


* Fiunt etiam in fluminibus rotae eisdem rationibus, quibus supra scriptum 
est. Circa earum frontes affiguntur pinnae, quae cum percutiuntur ab impetu 
fluminis, cogunt progredientes versari rotam ; et ita modiolis aquarn haurientes 
et in summum referentes, sine operarum calcatura, ipsius fluminis impulsa 
versatae, praestant quod opus est, ad usum. Eadem ratione etiam versantur 
hydraulae, in quibus eadem sunt omnia, praeterquam quod in uno capite axis 
habet tympanum dentatum et inclusum ; id autem ad perpendiculum colloca- 
tum in cultrum, versatur cum rota pariter. Secundum id tympanum, majus 
item dentatum planum est collocatum, quo continetur axis,habens in summo 
capite subscudem ferreum qua mola continetur. Ita dentes ejus tympani, 
quod est in axi inclusum, impellendo dentes tympani plani, cogunt fieri mo- 
larum circinationem, in qua machina impendens infundibulum subministrat 
molis frumentum, et eadem versatione subijitur farina. — Vitruvius, Lib. X. c. 
10. as quoted by Beckman, Vol. 1. 

Si aquae copia est, fusurus balnearum debent pistrina suscipere ; ut ibi 
formatis aquariis molis, sine animalium vel hominum labore, frumenta fran- 
gantur. — Pallad de re rust. lib. I. 42. edit. Gesn. II. p. 892. — Ibid. 

f Three hundred years after Augustus, the number of cattle-mills in Rome 
amounted to three hundred. — Bkckman. 


244 


OF THE NATURE OF STOCK. 


driven by the water from these aqueducts. To remedy the 
evil, that general devised the scheme, of anchoring barges in the 
river, in which he placed mills driven by the current. The 
plan met the immediate exigence, and,^as such a construction 
suited the low strengtlrof the accumulative principle of the age, 
it was generally adopted elsewhere. In the present times, such 
a plan would be rejected, because, though the first expense is 
comparatively small, the durability of the instrument is too short. 
We prefer the greater expense of making dams, and sluices, on 
account of their greater durability. The cause leading to the 
construction of the one or the other, is the same as that deter- 
mining the Chinese to the formation of floating gardens, where 
the Dutch would build dams. 

The invention maintained itself through the dark ages, and 
followed the improvement and extension of agriculture, and 
facility of communication, which returning civilization and tran- 
quillity gradually diffused. It seems to have spread very gen- 
erally over Europe, about the beginning of the sixteenth cen- 
tury. The force of water being, by it, turned to the service 
of man, wind also was made to employ its powers to a similar 
purpose. 

Important as these engines were in themselves, from their 
immediate utility, they were more so in their effects. Men’s 
minds were directed to the advantage of what is termed machin- 
ery, instruments that is giving new velocity and direction to 
motion, and to the power of inanimate agents, generative of 
motion, of both which the mill afforded the first eminent instance. 
Examples of the possibility of executing by other powers than 
the human hand, or the strength of the inferior animals, one of 
the most difficult of the operations that the necessities of man- 
kind called for, being brought freshly before the eyes of almost 
all Europe, naturally prompted the genius of reflective men to 
conceive the idea of applying them to other, and even less easy 
processes. This general stimulus to the inventive faculty, con- 
joined with others, acting vigorously, but occasionally and par- 
tially, and already referred to, carried the improvement through 
a great variety of operations. Mills of all sorts, came to be 
constructed, driven commonly by water, as the more forcible, and 
manageable power. To trace the course of invention through 
these, were not to mark the principles regulating the progress of 


OF THE NATURE OF STOCK. 


245 


that faculty, but to enter on a description of European art. It 
may be sufficient to observe, that, in conformity to these princi- 
ples, not only was each difficulty overcome by it, a benefit to 
the particular art it was meant to serve, but to art in general, 
each conquest extending its authority, not alone over the prov- 
ince where it was achieved, but over the whole region which it 
was its object to gain. If, for instance, comparing the ingenious 
and complete machinery of a well-constructed flour-mill of the 
present day, with a model of the rude and imperfect engines of 
the sort that existed two hundred years ago, we ask the cause 
of the difference, we shall probably be told, the improvement 
of mechanics ; but, if we trace the progress of this improve- 
ment carefully, we will find, that it was the fitting of the ma- 
chinery of this very engine, to other arts that was one of the 
main producers of it. The productions of the union of arts 
also propagating others, like all generators, their increase goes 
on, to borrow a phrase of common use in inquiries connected 
with these, when there are no retarding checks, not in a simple 
arithmetical, but in a geometrical progression. 

The effects, produced, by the passage through different 
arts, of this improvement on a very ancient engine, import- 
ant as they were, have been far exceeded in extent of con- 
sequences, by one of altogether modern invention. I allude to 
the steam engine, the progress of which, we will find to have 
regulated itself almost altogether according to the above prin- 
ciples. 

As the progress of order, civilization, and art, covered the 
island of Great Britain with a numerous population, the stores of 
fuel which its cold and moist climate required, and its forests had 
at first afforded, were by degrees exhausted. Its situation pre- 
vented its receiving the supplies, which, had it made a part of 
the continent, might have been brought down rivers, issuing from 
interior regions. Necessity thus taught its inhabitants the gen- 
eral use of coal, in which, happily, its territory abounds. But 
what of this material lay close to the surface, and the fields im- 
mediately beneath, having been wrought out, the miner was urged 
on by the increasing wants of his countrymen, and the abundant 
materials before him, to penetrate still deeper, and the labors of 
generations formed large excavations, in regions far beneath the 
surface. Here, however, he was met by an enemy continually 


246 


OF THE NATURE OF STOCK. 


gathering strength as he advanced on him, and threatening com- 
pletely to bar his future progress. The farther he penetrated, 
water poured in upon him in greater quantity, while to free him- 
self of it he had to eleyate it to a greater height. A period 
seemed approaching, when very many of the mines must be 
abandoned. In this extremity, it was natural to the men en- 
gaged in this occupation, to cast about, and endeavor to dis- 
cover some devise, through help of which they might success- 
fully continue its pursuit. The resources of all powers hitherto 
known having been tried, as far as in such situations they could 
be effectually employed, and seeming to be on the point of yield- 
ing, it could not but occur to attentive thinkers, that, if they 
were to succeed, the probability was it would be through some 
one hitherto unemployed. Of those, steam was perhaps the most 
apparent, and manageable. Its force must have been at least in 
some measure, known to many, and had been previously pointed 
out by one distinguished individual, as capable of producing the 
greatest effects. The operation to be performed by it, too, seemed 
peculiarly fitted for its action. Water is moved in pipes, and, 
it is only in confinement that the power arising from the rarifica- 
tion, and condensation of steam becomes sensible. It appeared 
then by no means impracticable, to manage the condensation 
and ratification within metal pipes, so connected with those in 
which the water had to be raised, as to supply the force neces- 
sary to produce its elevation. On this principle the attempt was 
made, and succeeded, in first practically establishing the power 
of an agent, destined, we cannot doubt, to produce effects, far 
greater than any which has hitherto been placed within the hands 
of man. 

The various circumstances conjoining to bring about this im- 
portant event, are deserving our attention. 1st. The urgent 
demand for some powerful agent, however rude and unwieldly 
in action. Had the operation to be performed, been in any 
degree complicated and nice in its nature, it would never pro- 
bably have occurred to any one, that the expanse and collapse 
of a vapor, shut up in iron vessels, could be brought to execute 
it. 2d. The materials, metal, coal, and water, being in these 
situations abundant. 3d. The previous improvement of ma- 
chinery in general. 4th. The want occurring to men of pro- 
perty, and of a class in general bold in enterprise, and accus- 


OF THE NATURE OF STOCK. 


247 


tomed to stake their funds freely. Had any of these been want- 
ing, this extraordinary invention might yet have slumbered, 
veiled in the darkness which had covered it for so many thousands 
of years. Perhaps it might have been stifled at its birth, for its 
first appearance gave but slight token of its inherent capabilities. 
The expenditure of fuel and of labor, necessary to the discharge 
of its functions, was excessive. It having, however, been thus 
established, that it was an agent, within the compass of man’s 
ability, to make a partner in the series of his operations, there 
was a strong stimulus to endeavour to render it a more econom- 
ical agent. This was effected by a change in the construction 
of the apparatus, the leading feature of which, is, the causing 
the steam to perform its operations, through the intervention of 
a piston. The instrument thus produced, was an effective and 
economical operator in the purpose designed. The improve- 
ment was important in itself, and far more so in its consequences. 
Had the machinery of simple pipes and valves been continued, 
under some improved form,* it might have appeared only fitted 
for propelling fluids, and been confined to that purpose, as through 
the aid of sails of some sort, wind has been made to propel 
vessels, from very early ages, though it is only of comparatively 
recent times, that it has been applied to give motion to mills. 
But, the introduction of the piston, and its adjuncts, showed the 
power in a familiar form ; the handle of a pump was a thing well 
known as put in motion by machinery, and it was obvious that 
the movement had only to be reversed, to communicate motion 
to any machinery. Under this form, therefore, its progress as a 
power through all other machinery, may be said to have been 
inevitable. It possessed the important advantages of being 
always at command, uniform in action, and unbounded in force. 
In this progress it was assisted in one important step by science. 
The discovery of the doctrine of latent heat enabled it at once 
to surmount a great obstacle, which might otherwise have long 
limited the extent of its operations. * It is perhaps not to be 
supposed, but that the general truth would have been itself at last 
made known by the continual groping after improvement, which 
the existence of such an instrument in the hands of men would 

* The formation and condensation of the steam, might have been man- 
aged in chambers, separate from the system of pipes and reservoirs elevating 
the water. 


248 


OF THE NATURE OF STOCK. 


of itself have occasioned ; if however science advanced it by only 
a few years, the beneficial effects of such an anticipation, will be 
allowed to have been very great.* 

In its course, two things seem specially worthy of notice, the 
additional freedom which it gave the inventive faculty, and the 
circumstances which existed to facilitate the progress of that 
faculty, and which it seized on for the purpose. The conscious- 
ness of the possession of an agent, of unlimited and perfectly 
manageable power, which had escaped the attention of all pre- 
ceding ages, seemed to have immediately more effectually broken 
the constraining and retarding influence of the propensity to 
imitation, than any preceding event. Whatever mere motion 
could do, if the sphere of its action could be contracted into 
small space, was conceived within the power of steam, and in- 
vention set to work with a determination progressively to supply 
the means of its application. In these essays, it has been always 
ultimately successful. It is not necessary here to enlarge on the 
great changes it has hence effected, or on the important improve- 
ments it has introduced. It is to be observed, however, that, 
whatever it has performed, has proceeded in the order we have 
indicated, and which, I believe, almost all inventions have fol- 
lowed. The diversity of climates, territories, productions, and 
other circumstances of different regions and nations, has helped 
it, as them, forward, and been to it as it were steps, by which it 
has gained the rank it holds in the modes of human industry. 

Thus the peculiar circumstances of the North American conti- 
nent, may, with propriety, be said to have been the exciting cause 
producing steam navigation, one of the most important of these 
steps. That country is full of great lakes and rivers, affording the 
easiest, and often the only means for the transport of the larger 
quantities of agricultural produce, that its interior sections yield. 
Such inland navigation is always exceedingly tedious ; there were 
therefore peculiar reasons for the devise of some new agent to 
facilitate it. An agent like steam too, might evidently be em- 
ployed with more safety and chance of success, in calm inland 
waters, than in the great ocean. If we consider, in addition to 
this, the greater play which, from circumstances already enume- 

* Since the above was written, 1 have seen it stated, that Watts did not 
take the idea of his great improvement from Dr. Black’s discovery, but that 
it was entirely the result of his own inventive powers. 


OF THE NATURE OF STOCK. 


249 


rated, the inventive faculty enjoys in that continent, we shall see 
that it was there, so to say, that this improvement ought to have 
taken place. The point, too, in North America, where it did 
first actually take place, is also, as it were, particularly marked 
out for it. The transport between New York and Albany, by 
sailing vessels on the Hudson river, was both very expensive, 
and pecularily tedious. Steam has there changed a voyage of 
days, or weeks, into one of less than sixteen hours.* 

The circumstances leading on to the invention of steam land 
carriage, may also be noted as exemplative of this view of the 
subject. There were first simply railroads, to facilitate heavy drafts 
for short distances, from coal mines ; then there was a more general 
use of them in all heavy drafts; finally, there was the general 
application of steam, as the power to effect transport of all sorts, 
and with all velocities, along the smooth surface they afforded. 
All that was wanted for the last step was, that the mechanism 
should be rendered less heavy and cumbersome, and, it may be 
remarked, so great confidence had been generated of the power 
of the inventive faculty, that the undertaking was commenced 
with full assurance that it would accomplish the desired improve- 
ment, although the manner how was not known. The result 
showed that the confidence was not misplaced. 

Thus, such are the steps by which invention advances, that it 
would seem, had there been no country like Great Britain, the 
steam engine might not yet have been produced; had there been 
none like North America, steam navigation might not yet have 
been practised ; and again, had not Great Britain existed, metal 
railways and steam carriage might have been still only in the 
category of possibilities. 

The invention of printing has often been cited as one of the 
most important of modern times. The steps by which it ad- 
vanced were also of that gradual and easy nature, one leading on 
to another, and surrounding circumstances prompting to essay the 
ascent, as to take away all admiration of its progress, were it not 
that the constitution of man’s nature renders the passing of any 
individual, coolly and deliberately, the least out of the circle of 
imitation, very often a proof of the strongest powers of mind. 
There was first the stamping with signets ; then the transfer of 
this initial art, to stamping, instead of painting, playing cards ; 

* Note H. 

32 


250 


OF THE NATURE OF STOCK. 


then the existence of a great and unceasing demand for one book, 
the Bible, the excessive cost of transcription, and the transfer of 
the art of stamping cards to stamping pages, first of the sacred 
volume, and afterwards of others ; lastly, there was the passage of 
another art, that of casting dies for coining, to facilitating the 
formation of metallic types.* The art, thus perfected, was dis- 
seminated by the tyranny of a petty prince.f 

The art which has most immediate connexion with the increase 
of wealth, the business of banking, is itself in some measure illus- 
trative of the influence of change in producing improvements in 
all arts. It commenced in countries where exchanges for large 
amounts were numerous. Venice, Florence, Genoa, Amster- 
dam, the great marts of commerce, were the first banking com- 
munities. In them, however, its operations were confined to 
transfers of specie, and the benefits derived from them consisted 
chiefly in security given, and trouble avoided. It passed, at last, 
into countries where there were comparatively few actual ex- 
changes, and where, in order to effect the passage, invention was 
obliged to develope its capacities for facilitating, and thus exciting 
and increasing exchanges. The following extract from the Wealth 
of Nations will render this apparent. 

“ The commerce of Scotland, which at present is not very 
great, was still more inconsiderable when the two first banking 
companies were established ; and those companies would have 
had but little trade, had they confined their business to the dis- 
counting of bills of exchange. They invented, therefore, another 
method of issuing their promissory notes ; by granting what they 
called cash accounts, that is, by giving credit to the extent of a 

* In ascribing the invention of printing not to chance, but to the gradual 
progress of events, I am supported by the authority of Condorcet, and appa- 
rently also by that of Dugald Stewart. “ L’invention de Pimprimerie a sans 
dout avance le progres de l’espece humaine; mais celle invention etoit elle- 
meme une suite de l’usage de la lecture repandu dans un grand nombre de 
pays.” Vie du Turgot. Pref. to first dissertation to Enc. Brit. 

t On sait comment Pimprimerie s’est repandue depuis 1462 par la revolu- 
tion que Mayence eprouva cette meme annee. Adolphe, comte de Nassau, 
soutenu par la Pape Pie II. ayant surpris cette ville imperiale, lui ota ses lib- 
ertes et privileges. Alors, tous les ouvriers, qu’elle avoit dans son sein a 
Pexception de Guttenburgh s’enfuirent, se disperserent et porterent leur art 
dans lcs lieux et les pays ou il n’etoit pas counu. C’est a cetevenement que 
tous les historiers reunis a Jean Schoeffer fils de Pierre et petit-fils de Faust, 
placent Pepoque de la dispersion dont l’Europe profita. (Encyclopedic art 
Imprimeriei.) 


OF THE NATURE OF STOCK. 


251 


Certain sum, (two or three thousand pounds for example), to any 
individual who could procure two persons of undoubted credit 
and good landed estate to become surety for him, that whatever 
money should be advanced to him, within the sum for which the 
credit had been given, should be repaid upon demand, together 
with the legal interest. Credits of this kind are, 1 believe, com- 
monly granted by banks and bankers in all different parts of the 
world. But the easy terms upon which the Scotch banking 
companies accept of repayment are, so far as I know, peculiar to 
them, and have perhaps been the principal cause, both of the 
great trade of those companies, and of the benefit which the 
country has received from it.” 

If we may judge of the progress of an art from its general 
success, the transfer of the business of banking to Scotland would 
furnish another proof of the benefits accruing to arts themselves, 
from their passages from country to country. No where has 
banking been productive of more acknowledged advantages, 
and no where have the evils occasionally attendant on it been 
few T er. # 

As also illustrative of the subject, I may call the attention of 
the reader to a fact often noted, — the small progress of the 
aborigines of the new world in art, when compared with that 
attained by the inhabitants of the old. 

If we are to search for natural causes of the phenomenon, in 
my opinion we may find them, in the greater extent of continent 
in the eastern than in the western hemisphere, and, especially, 
of continent lying under the equatorial regions, the birth place in 
both of the arts they possessed. This extent of country, and 
diversity of materials, must have increased very much the chance 
of discovery in the arts, and tended greatly, on the principles we 
have just been considering, to push forward their improvement. 
To take as an example an art which has been particularly referred 
to.f that of domesticating the ox, and teaching him labor. To 
suppose that men, while the whole of that species of animals 
were yet wild, conceived the project of domesticating them, in 
order that they might apply them to the various purposes they 
now serve, were a conjecture altogether unwarranted by any 
event in the history of mankind and of art. We have rather 

* Note G. 

t Dr. Robertson’s History of America, vol. II. 


252 


OF THE NATURE OF STOCK. 


reason to believe that in this, as in other instances, they must 
have been led on to the object gradually, by the intervention of 
circumstances, each carrying them a certain way towards this 
great end. But there must evidently have been a greater chance 
for the existence of such circumstances, in the great range of 
continent lying within, or not far from, the borders of the torrid 
zone in Asia, Africa, or Europe, than in the small part similarly 
situated in America. Without pretending to say what those 
circumstances were, it is at least probable that one may have 
been the keeping these animals in enclosures, merely to satisfy 
the curiosity, or to afford the amusement of hunting to the chiefs, 
or kings, of the agricultural nations. This we know, in more 
recent times, to have been a custom in some eastern countries.* 
There they would in time lose great part of their natural ferocity, 
and become, like deer in our parks, half tame. Now, it is evi- 
dent enough, that the chances for this important step towards the 
accomplishment of the object being undertaken, would be directly 
in proportion to the number and extent of the agricultural countries 
of those ages, that is, to the extent of continent lying near the 
equator. 

The period when the event took place marks a great change 
in the condition of man, for, independently of its immediate effects, 
it necessarily brought about the existence of a race of herdsmen, 
occupying regions, in the state of art at the time, not coming 
within the range of the strength of the effective desire of accu- 
mulation of the neighboring people, as tillable land. Herdsmen 
once existing, it could scarce be but that they would spread 
themselves wherever they could find support for their cattle, and 
gradually exterminate the hunting tribes. There is, I think, 
reason to suppose that such a revolution occurred in Europe 
many ages previous to the time of recorded history. Its import- 
ance may be estimated from the observations that are made in a 
preceding part of this volume.f 

We may, on similar principles, in part, account for the low 

* Xenophon. Cyrop. 

t Page 148. Were this the place to enlarge on the subject, many circum- 
stances confirmatory of such an event might be enumerated; as the traces of 
the existence of a race of mere hunters over all Europe, the roots of European 
languages being the same as those of central Asia, the form and constitution 
of the present domestic ox species, and of sheep, marking their gradual migra- 
tion from a warm climate, into colder regions and more abundant pasture. 


OF THE NATURE OF STOCK. 


253 


rank in the scale of humanity occupied by the aborigenes of 
Australia, that fifth and yet but partially explored continent. 
The uniformity of soil, climate, and natural productions, of that 
whole region is very great. This limited variety of materials 
would seem to have diminished the number of arts generated, 
and that of improvements arising from effects of changes, among 
those having obtained existence. 

In conclusion I may observe, that I believe it will be found, 
that there is no art in existence which we may not find means to 
trace, with greater or less certainty, to the rudest and most simple 
principles, and which may not be shown to have attained perfec- 
tion by continual changes from place to place, and material to 
material, and by encountering consequently alternate difficulties 
and facilities, the former developing its powers, the latter extend- 
ing their field of action, and both, by helping to introduce general 
principles, weakening the restraining power of the tendency to 
servile imitation, and advancing the progress of science. This 
successive passage of the same arts from country to country, and 
from one into another, seems to be the great exciting cause of 
the progress of them all. The greatest improvement of British 
manufacture in recent times is, I may remark, a passage of this 
latter sort. The cotton manufacture is a passage of the art of 
fabricating woollens, into that of fabricating cottons. It was the 
perfection of the former more easy art that showed the possibility 
of the existence, and eventually brought about the existence of 
the latter, invention in this case, being excited by the higher 
wages of labor in Europe than in Asia. Improvement was the 
consequence. The peculiar difficulties the material presented 
being overcome, the facilities it possessed were experienced. 

This view of the subject seems somewhat to illustrate the fol- 
lowing reflections of Lord Bacon, concerning the early progress 
of art, and may satisfy us, that, even yet, they are not altogether 
inapplicable. He observes, that, “ although, when we first begin 
to consider the variety of necessaries, conveniences, and elegances, 
which the mechanical arts minister to life, we are rather struck 
with a feeling of admiration at the abundant wealth which man- 
kind inherit, than with a sense of their poverty ; yet, when we 
examine every thing, and consider through how many chances 
and revolutions these arts have been brought to their perfection, 
and through what simple and easy reflections they have been 


254 


OF THE NATURE OF STOCK. 


discovered, such sentiments will soon leave us, and we shall be 
inclined to commiserate the penury and barrenness of invention 
of the human race, which have taken so many ages to accom- 
plish things deducible without difficulty, from facts neither very 
numerous, nor very hard to be ascertained.” * It is indeed true 
that the philosophy, in the introduction of which he bore so 
eminent a part, has, in these latter ages, been a very effective 
promoter of the dominion of man, and, mixing with art, has much 
purified and dignified its spirit, and greatly increased its powers, 
turning invention in this department from particulars to generals, 
and converting art into science. This has more especially hap- 
pened in the chemical sciences, and those connected with them, 
a sphere to which, I may be allowed to observe, his system seems 
particularly applicable. There, science begins to lead and direct 
art ; in other departments she rather follows and assists it. But, 
with regard to the general progress of art, even its recent history 
evinces the justice of these observations, and shows that “ men 
estimate falsely both their possessions and their pow r ers, deeming 
of the first more highly, and of the last more lightly, than they 
ought.”f We shall admit this, if we consider the vast number of 
qualities and powers, and of new practical combinations of them, 
that, in our days, have been discovered and applied to use, and 
reflect on the long series of ages during which they were hid in 
darkness, on the proximity of men to them, and the ease with 
which they might have lighted on them, would they have turned 
their eyes, ever so little, out of the busy circle of actual life and 
occupations. If, too, the history of the past tell us truly what 
the future will be, we may feel assured that, as it is not the powers 
of nature or of man, but the application of them, that is limited, 
if individuals be inclined by their own dispositions to apply them- 
selves to purposes conducive to the general good, and if they be 
incited to do so by causes similar to such as have before operated, 
art and science will still stretch their capacities, until they may 
at length reach an extent of which it is impossible for us now to 
form any conception. 

An attentive consideration of the history of art might also give 
rise to a series of reflections of another sort. It would show a 
purpose, which does not strike us on a first view of the creation. 
Nature, it would seem, if I may be allowed so to express myself, 


Nov. Org. L. 1. LXXXV. 


t Idem. 


OF THE NATURE OF STOCK. 


255 


sensible of the combined pride and imbecility of man, has so 
arranged the world she has provided for him, as to make it the 
means of urging him on, in a continual progress, towards higher 
and higher attainments. Neither the defects of his limited and 
cloudy faculties, nor the intoxication of the vainglory, that, fed 
by his imitative propensities, is ever representing him to himself 
as having reached the summit of terrestrial perfection, can pre- 
serve him stationary. He is now impelled by necessity, now 
excited by hope, to attempt the amelioration of his condition, and 
thus gradually to develope the latent capacities of his own being, 
and of the sphere of existence in which he moves. By a diver- 
sity of climates, soils, and nations, steps are, as it were, arranged 
for him, up which he is gradually enticed, or compelled to mount, 
to fresh acquisitions of knowledge and power. He is never allowed 
to remain stationary. A portion, indeed, of the race may, and 
for a limited time, but ultimately they either improve, or yield 
their place to surrounding peoples who have improved. 

Some philosophers urge it as an objection against the world’s 
having been formed by a designing cause, that so large a portion 
of its surface is useless to man. According to them, had it been 
formed by perfect and beneficent reason, it should have been such 
a level garden, as a certain theorist supposed it originally to have 
been. Had it been so, we may safely assert, that man, as man, 
could never have inhabited it. He must either have been formed 
above, or sunk below, his present condition. Because we do not 
turn to any account the sandy desert, or rugged mountain, we are 
not entitled to look on them as blots on the general utility of the 
creation, or suppose, even, that they may not be put to use by 
succeeding generations. The savage of New Holland conceives 
every tree useless that does not* soon rot, and so breed maggots 
for him. The ancient Romans scarcely conceived that the woods 
and morasses of Caledonia would, at any time, be abundantly 
useful. We judge rashly, then, in condemning as useless any 
portion of the earth. Even the barren deserts of Africa may, in 
after ages, be fertilized. Art and industry may, in time, draw 
water plentifully from the depths of the earth, and cover them 
with treple harvests. To do so, human art must make great 
advances, and these and the other obstacles it has met with, and 
will meet with, are stimulants to its advance. 

War itself, so great an evil to the individuals within the scope 


256 


OF THE NATURE OF STOCK. 


of its ravages, is evidently the only manner by which, in certain 
states of society, an amelioration can be induced. The destruc- 
tion of the Roman Empire, and almost of the Roman race, by 
the barbarians, was, perhaps, ultimately, the most beneficial revo- 
lution ever brought about. Even in its minor consequences, this 
apparent evil produces also much of real good. Without it, many 
of the most useful inventions might never have been either pro- 
pagated, or improved. 

We are ever ready to forget the part which nature thus bears 
in our operations, and to lay the whole credit of our skill and 
industry to our own discernment. The slow and gradual manner 
in which she has led us on to the acquisition of every art, 
acting all along the part of the sagacious teacher, who puts 
before his scholar, at first, the most simple and easy lessons, and 
on his mastering these, by degrees, through the influence of suit- 
able rewards and penalties, conducts him to more difficult efforts, 
meets not our notice, and rises not to our thoughts. 

Were these or similar reflections fitly placed here, the subject 
might give occasion to many more of the sort. But, it seems to 
me, that we act always rashly and imprudently in bringing in such 
disquisitions into inductive inquiries. They belong to another 
subject. 

The aim of science may be said to be, to ascertain the manner 
in which things actually exist. The doing so, indeed, has been 
generally found to bring to light some useful purpose in their 
arrangement, and the proofs of benevolent design thus exhibited, 
are exceedingly interesting in relation to the evidence they afford 
us of the attributes of the great first cause. But, as science is 
only progressive, we are never certain of having ascertained the 
exact manner of the existence of any thing, and, therefore, we 
must often be mistaken in the ends for which we may conceive 
that the things we see are formed. The confident assumption, 
then, that we have exactly ascertained, in any case, the precise 
end, and the application of this assumed purpose, as a guide to 
scientific inquiry, has a decided tendency to retard the progress 
of science. For, the supposition that the actual arrangement is 
different from what it was conceived to be, is held to be inadmis- 
sible, as it would imply some deviation from the design for which 
we assumed it was devised. It is, as Lord Bacon expresses it, 
an improper blending of things human and divine, and a mode of 


OF THE NATURE OF STOCK. 


257 


reasoning which he, in my opinion, with much propriety repeat- 
edly cautions his followers to avoid. 

The reflections, therefore, as to the probable designs of nature, 
in the constitution of the world as the abode of man, which I have 
here introduced, would have been excluded, had it not been that 
Adam Smith, and many other popular writers on these subjects, 
sometimes indirectly, in their application of terms, sometimes 
directly, in their reasonings, assume, that the designs of nature 
are quite opposite to what I have represented, and make their 
conceptions of her purposes an argument in favor of their par- 
ticular theoretical views. 

The embryo doctrine is to be found in Virgil. 

u Nonne vides, croceos at Tmolus odores, 

India mittit ebur, molles sua thura Saboei P 
At Chalybe3 nudi ferrum, virosaque Pontus 
Castorea, Eliadum palmas Epirus equarum ? 

Continuo has leges aeternaque fcedera certis 
Imposuit natura locis, quo tempore primum 
Deucalion vacuum lapides jactavit in orbem.” 

“ Thus Tmolus is with yellow saffron crowned ; 

India black eben and white ivory bears ; 

And soft Idume weeps her odorous tears. 

Then Pontus sends his beaver stones from far, 

And naked Spaniards temper steel for war : 

Epirus for the Elean chariots, breeds 

(In hojjes of palms) a race of running steeds. 

This is the original contract ; these the laws 
Imposed by Nature and by Nature’s cause 
On sundry places, when Deucalion hurled 
His mother’s entrails on the desert world.” * 

In the same manner as by the poet, the products of different 
regions are spoken of by political economists, as bestowed on 
them by nature, are termed natural productions, and the attempt 
to transfer them to other sites, is held to be a procedure in oppo- 
sition to the designs of providence, whose intentions, it is asserted, 
in giving them these productions, were, that the inhabitants of 
different countries should exchange the products of their several 
territories with one another. 

There are, I conceive, two objections to this view of the sub- 
ject, the first referring to the term, natural productions ; the 
second to the purposes assumed to be the ends designed by na- 
ture. 


Georgic I. Dryden’s Translation. 

33 


'll*.' 


t : * : >: .* - i. 


If br xbe rprrrr. nairr- al pjodurcksns. W£ XBeHU tiling? 
t rrrnnnt fnp aid cf STZ. ibfiH HD chihzed COTBMTT CM be SBto 10 

HETe st t natural xiiodarckms. for id n3i mat in paadBoa an Jects 
5 k aid- fe tope, xbereiare. I think. better to sabstmae is- Hie 
T-prm -nsTTr -s' productions. that of actual productions. 

Bul because one catfrp alone host prodooe? paracsiMr 
cammDdioe?.. «e a^kso means warranted 10 MDbie ua» 



nature irrrfmrW; ibex snould be produced cndy mere- Ob 
canuErr. if w may more cf a scnsme by me mode in wi 
is pars are arranged, ane in winch they an. ner 
were. TTryn the vanenr of maieriab ffacei r*eiare 
mmersie me rudiments of ars at oinereic poms, bis mat 1 
ares shame be adranced from their fast rong^i smmlKJry, 
carried id greater and greater rsodkace, by passing irotm 
region and people ir another. If. therefore. we find any a 

•fmp-r id £ narr imiar r egion fbe armsl pr odnrrinm of OBkhr 

ular camnmnkjes. me presumption k. inai in k yen is is? 
and than it will only be a? k is carried id new countries 
men. and generally drttised orer me whdk globe. mat u wH ad- 
Tance towards mamrirr. Time has shown tnarr me snt*t>Dsec 
laws and teres of nature. which me past declared to be cf 
e ternal power, are aireacT abrogated br me jrogress of are. 11 
of ibe instances be adduces. Tne natural proaor-dons cf Great 
Britain. serriceadk id man, are certainly very few. The cutaiorue 
of her actual productions, even cf those ainme in whirr hh^ p Twim . 
neiiLy excek. k greater than that of arr region cf eoual er rant- 
Were Vigil now albe he certainly would non eke A Inarm far 
horses, or Spain for iron. Tase results are entire ty me work cf 
art. to the operations of which h k impnsinie 10 put bet bounds. 
Wiio can pasitirely say what fifty years hence will be the produc- 
tions cf any country r 


It k the intention of the in retim e iaculrr. when ir ax x*ue$ 
itself lo the arts nnnkiering to the necessaries, coirreshences, or 
5: 1 pert . • . — : - v t: r ; 1 o. : - r ■ . ; r * : l * e f . e:t 

we treat cf considers, to increase the supplies which it k the 
aim cf each to procure. If when k gams the ends it purposes, 
it really produces tbk increase, in doing so, k must render the 
labor cf the members cf the socuelj in width k ope rats more 
eSbcljTe, and enable them from tht sane outlay 10 oroduoe 


nrsmsr z^iins sr innL lies zrnisrj n zrrjvacs: -zur «n<*- wim 

Aa momwsaseir it He «HSDncaiiiL «e t. ucb©- He 

afeiQBas -HHIMr jIil Han ffg gnnPTr II, imdBjUL i gr *saer msnr rr 

xc ^cii T^xit aie sane lane mil jmet. ir m Eausi. Tnamtv jf 

- — - 

jam ttcx Je^ejr a.ie ait _es jsuhe- Tie ise it hk i= t 
leivHr linamsies ney 2221 t lie sranr -nygaT at -ng-iim he 
5W23zacns is 'naan. i s snnio^L. ani_ trer^m^_ innL i e=^ 
vacs. isl ■— l Woe —11111111 11 

m niBi Ti isse zest aL mine amnesrine- hst nmnnngnE 
camssre tA sara. Oder for He urj^arsi ^aems nef Hramce. 
miL nan n imjcnrmn if - He sane mit inn mns^ 

— JL 4 m 

T y"SLlfc 2 r sfen?? irun He gnrp Hir.:r lie mm, n He *^namT 
ffi He nsnmerTC 9 jh ~i le msssseL. an: x newel h 
hi me if mr.'A^r T =mrT- nisi lie amresiiL ^TEarum?? if He 
HTusniiie a»nr -umnr htt* le anf f^rr n=^iw=?-r 

iiranly ^ huIeshij en£ H tell Hnin - i we rDare. Tim m nz 

.-n insenl^ n . js sx LTi"r He me ierais ttstt t mn- 


HOHfc 




He ir He irmszi: ne ismnE 


s snnuIciT 


. : ' : . ar 7 " 

1 : HSTHnenB muin.EmL "rrin iame neEilLy n cel 

1: k fere ass; n> ze hek^i h i amiiHi axy ihoj m- 

rr BPnwn fmrrffiisrFEy . EM EZ EECT- mi" He HEHUieilt 

innr g^ :. 1 im ernTT -gef inm He r; ir rang e a 

ns Tr-imeTT^ nv aei rr He swaBSC. Tie szz ’ rHi en:T~ tf He 
iv r - -— ^ iarnirr ete tite £ n h n~ la rrna- mi. mr n He 



rmr ner tpieic- 


nm: 1 n _;.n zr-m 

t ~t:t tm m _n a* an he- . 
unimcsL x mum hi issnert zie mm 



smr. hit ~v~ tih: le Ten Ennui" i*m n ti m Erer me 
is44 tfiuhz zmz t = ~: -_ aniaxH j ir mc, he mae snsy 
"vnuxL TyiE irsar ir 1 : z htthic: it seer; .r cm aw. am 
aL vm Hmsmnet lieaiL zrar 5s. emm neme: if lie soek 
• gtmir r:z He sure inns." is^e ssanewna: nmer jEnin^ Tie 
name lezm if TryErumzTg iwiei jw He :=jr*er* Ttimii ze zmre- 

am mB 

* 'lsiz 9m le i*iih”i mini Jf *1 zn n si imn . r n ..^dst 

’EH* 

Sx hi trame*- WT mnr ■ \ T: °TTgTgL jv- mr>~irg He name ^ack 


* iiltn^s rrrr t? 




260 


OF THE NATURE OF STOCK. 


of instruments belonging to any society, to more productive orders, 
increase proportionably its absolute capital and stock. Should 
a naturalist, in examining the nature of the surface, on the farm 
of an individual in a small agricultural society, make the dis- 
covery, that beneath it there was a quantity of plaster of Paris ; 
and should the farmer, in consequence of his recommendation, 
sprinkling a little of this reduced to powder on some of his fields, 
find that it caused them to yield double returns, his farm or the 
lease he held of it, might in his eyes be doubly valuable, and he 
might demand in exchange, and perhaps receive two other farms 
of equal size in its place. Were it, however, found, that a stra- 
tum of this substance extended over the whole range of country 
possessed by the society, and was equally efficacious when ap- 
plied to any portion of the surface, his farm would not be more 
valuable than other farms. The supply, however, for future 
wants, possessed by the whole society, would be largely increased, 
and the strength of their effective desire of accumulation remain- 
ing undiminished, their absolute capital would be proportionably 
augmented. But, as the whole stock of instruments remained 
the same, with the exception of the difference made, by the sur- 
face having been sprinkled with a quantity of this mineral powder, 
their amount, as measured by one another, would be the same 
as before. Some instruments might possibly exchange for a 
greater amount of instruments of another sort, than formerly, but 
this change could no more be considered an increase in the total 
value, than the fact of the latter instrument exchanging for a less 
amount, could be considered an indication of a diminution of the 
total exchangable value of the stock of the society. The rela- 
tive capital and stock would thus remain unchanged. But, 
though this relative or exchangable value of the society’s stock 
might remain unchanged, its absolute capital and stock would be 
increased. The reality of such increase is marked, in all similar 
cases, by at least three circumstances. 

1. The members of the society possess, in general, a more 
abundant provision for future wants, the revenue of the whole 
society, and of each individual composing it, is increased. 

2 . The whole society, as a separate community, becomes 
more powerful, in relation to other communities. It can support 
the burdens of war, and the expense of all negotiations and na- 
tional contracts with foreign powers, with greater ease. It can 


OF THE NATURE OF STOCK. 


261 


also, without inconvenience, execute a greater number of useful 
works and undertakings. The imposts which the state levies for 
such purposes, in a society where the stock of instruments is 
wrought up to an order correspondent to the average effective 
desire of accumulation of its members, must almost always occa- 
sion some diminution of that stock. The returns coming in 
from their industry, being only sufficient to reconstruct the instru- 
ments as they are severally exhausted, an additional drain made 
upon their funds must, in most cases, prevent the reconstruction 
of many of them, and consequently occasion a disappearance, to 
that amount, of a portion of the general stock. But, when instru- 
ments are of more productive orders than the effective desire of 
accumulation of the society demands, the abstraction of a part of 
their retuins by the state, to supply its exigencies, only carries 
them nearer, or brings them altogether to an order corresponding 
to the strength of that desire, and, therefore, interferes not with 
their reconstruction. Taxation is paid out of revenue, not out of 
capital. 

3. As it is the effect of improvement, to carry instruments 
into orders of quicker return than the accumulative principle of 
the society demands, a greater range of materials is brought 
within reach of that principle, and it consequently forms an ad- 
ditional amount of instruments. The various agricultural im- 
provements with which invention enriched that art in Britain 
towards the conclusion of the last, and commencement of the 
present century, occasioned a great amount of materials to be 
wrought up, which before lay dormant. The construction of the 
plough in Scotland, and generally over the island, was so im- 
proved that two horses did the work of six oxen. The diminu- 
tion of outlay thus produced, giving the farmer, from a smaller 
capital, an equal return ; he was encouraged and enabled to apply 
.himself to materials, which he would otherwise have left, as his 
forefathers had done, untouched. He carried off stones from his 
fields, built fences, dug ditches, formed drains, and constructed 
roads. — Lime was discovered to be a profitable manure. The 
additional returns, which the hard clay thus converted into a 
black loam yielded, were spent in the cultivation of land before 
waste, in levelling and reducing to regularity, the rude ridges of 
antecedent periods. — The culture of turnips was introduced ; and 
instead of useless fallows the farmer had a large supply of a nutri- 


262 


OF THE NATURE OF STOCK. 


tive food for his cattle. He erected better buildings for the 
reception of his stock, he improved their breed, he transported 
manure from great distances, he had his fields trenched deeply 
with the spade, fresh soil brought up, and all useless or prejudi- 
cial matters buried beneath. Each succeeding improvement 
gave a fresh stimulus to industry, and brought new materials 
within the compass of the providence of the agriculturist. Nor 
was this all; the stimulus reacted also on the inhabitants of the 
towns, and their industry was augmented by the increased returns 
yielded by the country, and by the new demands made by it. 
Improvements, too, in the branches of industry in which they 
were themselves engaged, of at least equal extent, carried them 
forward in a like career. Rocks were quarried ; forests were 
thinned ; lime was burned ; the metal left the mine ; large manufac- 
turing establishments arose ; wharfs, docks, canals, and bridges 
were constructed ; villages were changed into towns, and towns 
into cities. 

It is thus that exery improvement animates industry, and 
though it cannot increase the amount of instruments immediately 
possessed by the society, or the sum of the values produced by 
measuring the one with the other, shows that the members of the 
society really estimate them higher than they would thus be rated, 
by their instantly commencing to work up, into analogous instru- 
ments, inferior or more stubborn materials, or by their working up 
similar materials more laboriously. The amount thus wrought 
up, until the process stops, by the total instruments constructed 
arriving at an order correspondent to the effective desire of ac- 
cumulation of the society, must depend entirely on the nature of 
those materials, and is, therefore, always a variable quantity, and 
one never to be ascertained previous to the event. Sometimes 
a very small improvement may put a large range of materials 
within reach of the accumulative principle, sometimes a very 
considerable improvement may not enable it to make much ad- 
dition to the stock of instruments before constructed. 

When misfortunes befal the general industry of a community, 
improvements, though they may not add to the national capital, 
prevent or lessen the threatened diminution of it. In agricul- 
ture, the introduction of the drill husbandry for grain crops, and 
the discovery of new manures ; in manufactures and trade, the 
improved construction of steam engines, the discovery of railroads, 


OF THE NATURE OF STOCK. 


263 


and many other recent improvements, have taken off part of the 
weight of the heavy burden, that has of late years been imposed 
on the resources of Great Britain. 

The high rate of profit, which, unless when counteracting causes 
intervene, follows the introduction of improvement, is indicative 
of an immediate proportional augmentation of the absolute capi- 
tal of the society, and produces a subsequent addition to its rela- 
tive capital, the amount of which is determined by the additional 
capacity which the materials in possession of the community can 
receive, and by the quantity of materials of the next lower grades 
owned by it. That high rate of profits, again, which arises from 
a deficiency in the strength of the effective desire of accumulation, 
is essentially different. It indicates no increase of the absolute 
capital of the society, no recent increase of the revenue of its 
members, no greater ability to support public burdens, and no 
approaching increase of relative capital. The want of a clear 
perception of this distinction, seems to have led Adam Smith, and 
some other writers, to speak of high profits as generally preju- 
dicial. 

In countries where the effective desire of accumulation is low, 
profits are of necessity high. Such countries, too, from their 
inability to work up into instruments the same materials, must 
always be poorer than their neighbors. Hence high profits have 
been regarded as indicating, and producing poverty. This pre- 
judice is one source of the errors of Sir Joshua Child on this 
subject, and it seems to have given rise to one or two rather de- 
clamatory passages in the Wealth of Nations. “ Our merchants 
and master manufacturers complain much of the bad effects of 
high wages in raising the price, and thereby lessening the sale of 
their goods, both at home and abroad. They say nothing con- 
cerning the bad effects of high profits ; they are silent with regard 
to the pernicious effects of their own gains; they complain only 
of those of other people.” # Now I apprehend that high 
profits springing from improvement, can never lessen the sale of 
goods either at home or abroad, for they do not occasion a rise in 
their price, but rather a fall in it. — “ In countries which are just 
advancing to riches, the low rate of profit may, in the price of 
many commodities, compensate the high wages of labor, and 

* Wealth of Nations, Book 1. c. ix. The paradox contained in the passage 
preceding this quotation is exposed by Mr. Ricardo. 


264 


OF TIIE NATURE OF STOCK. 


enable those countries to sell as cheap as their less thriving neigh- 
bors, among whom the wages of labor may be lower.”* In 
countries rising to riches, I conceive, that profits will commonly 
be high. They will be higher than where, the principle of ac- 
cumulation having had time to work up all the materials within 
reach of its strength, a stop is put to its farther advancing the 
stock of existing instruments, and the state of the society becomes 
stationary. If they be lower than in other countries, during the 
progress, it is from the greater strength of this principle. 

In North America, profits and labor have been permanently 
high, from the unintermitting transfer to that continent of Euro- 
pean arts, and from the generation of new arts in the country 
itself. In Russia the passage, in like manner, of new arts has 
kept the rate of profits high. But, of all civilized countries of 
the present day, these, probably, are the most rapidly advancing 
to riches. 

It thus appears, that it is through the operation of two princi- 
ples, — the accumulative, and inventive, that additions are made 
to the stocks of communities. It would contribute something to 
accuracy of phraseology, and therefore to distinctness of con- 
ception, to distinguish their modes of action by the following 
terms : 

1. Accumulation of stock or capital, is the addition made to 
these, through the operation of the accumulative principle. 

2. Augmentation of stock or capital, is the addition made to 
them, through the operation of the principle of invention. 

3. Increase of stock or capital, is the addition made to them, 
by the conjoined operation of both principles. 

Accumulation of stock diminishes profits ; augmentation of 
stock increases profits; increase of stock neither increases nor 
diminishes profits. 


Wealth of Nations, Book I. c. ix. 


CHAPTER XI. 


OF LUXURY. 

PART I. 

The general tendency of all the circumstances, the nature and 
causes of which it has been our aim hitherto to investigate, is to 
advance the wealth of society, the capital and stock of commu- 
nities. Were the operation of the principles of invention and 
accumulation to go on unchecked, the amount of the stock of all 
nations would be gradually and uninterruptedly increased ; the 
one furnishing the means of providing additional supplies for the 
wants of futurity, the other giving the motives to make the pro- 
vision. But there are opposite principles, the tendency of which 
is either to retard the progress of the general stock, or actually 
to diminish the amount already existing. To some of these we 
have now to attend. 

As the prevalence of the benevolent and social affections, and 
the strength of the intellectual powers, are the great springs from 
which the increase of the wealth and prosperity of communities 
arise, so it might be expected, as I believe it will be found, 
that the diminution of that wealth is chiefly occasioned by the 
spread of contrary principles, by the ascendency of the purely 
selfish, and debasement of the intellectual and moral parts of our 
nature. 

The first of these principles, of which we have to consider the 
operation, is vanity ; by which term I understand the mere desire 
of superiority over others, without any reference to the merit of 
that superiority. A perfect being may be desirous of superiority 
in well-doing, not on account of surpassing others, but from 
pleasure in the good he does. A very evil being may derive 
satisfaction from a superiority in evil-doing, simply from the 
pleasure which the certainty of having been the cause of very 
great misery may give him. But there seems to be a feeling that 
34 


266 


OF THE NATURE OF STOCK. 


finds its proper gratification in merely going beyond others, with- 
out reference to the path taken. It would be gratified by excel- 
ling in vice, were it not that the moral feeling restrained it ; it 
would be gratified by excelling in virtue, were it not that immoral 
propensities incapacitate it from attaining an eminent degree of 
it. It is this which, for want of a better word, I distinguish by 
the term vanity. It is a purely selfish feeling ; its pleasures centre 
in the individual ; and if it does not endeavor to diminish the 
enjoyments of others, it is never directly its object to increase 
them. When, in the course of its action, pleasure is communi- 
cated to others, this arises from its being then blended with other 
feelings. 

Its aim, in all cases that concern our subject, is to have what 
others cannot have. One of the most perfect instances of it ever 
exhibited was when Cleopatra caused a very precious pearl to be 
dissolved, that she might consume it at a draught. There could 
be here no pleasure in the taste of the liquor, that must have 
been rather disagreeable ; the gratification consisted in having 
drank what no one else could afford to drink. The son of the 
famous Roman actor performed a similar feat.* 

We learn from Pliny f that it became a sort of fashion at 
Rome as it seems to have been in the East.J 

But it is seldom that this feeling fixes itself upon objects that 
gratify it alone, on objects solely desirable from the difficulty of 
obtaining them, and from the consequent superiority which their 
possession implies. It -rather prefers such as have also qualities 
capable of gratifying other desires, or ministering to other pleasures. 
The amount, however, of these other wants supplied by the objects 
it covets is often very small ; if this be large enough to distinguish 
them from matters altogether useless, it seems very frequently 
sufficient for its purpose. The extravagances of the table in 
which the Romans indulged were of this sort. The enjoyment 
afforded by the articles consumed must evidently have arisen, 
almost altogether' from the high price they cost. A dish of 
nightingale’s brains could scarcely be a very delicious morsel, yet 

* Filius iEsopi detractam ex aure Metellae 
Scilicet ut decies solidum exsorberet, aceto 
Diluit insignem baccam. 

Hor. Sat. 11. IV. The value, 1,000,000 sestertii, was equal to about £5,000. 

t Plin. IX. 59. 

t Vis margaritarum aceto subactu. Quintus Curtius. 


OF THE NATURE OF STOCK. 


267 


Adam Smith quotes from Pliny the price paid for a single 
nightingale as about £66. £80 were given for a surmullet. 
According to Suetonius, no meal cost Vitellius less than £2000. 
The enormous prices paid for various articles of dress and furni- 
ture could have proceeded alone from the promptings of similar 
desires. Thus Adam Smith reckons the cost of some cushions 
of a particular sort used to lean on at table, at £30,000. 

The things to which vanity seems most readily to apply itself 
are those of which the use or consumption is most apparent, and 
of which the effects are most difficult to discriminate. Articles 
of which the consumption is not conspicuous, are incapable of 
gratifying this passion. The vanity of no person derives satis- 
faction from the sort of timber used in the construction of the 
house he occupies, because the wood work is usually concealed 
by paint or something else. Again : if the effects produced by 
it can be ascertained with accuracy, the object seldom affords the 
means of sufficiently marking superiority. Thus coal is con- 
sumed for the heat given out by it, and the different quantities of 
heat yielded by different qualities of coal are easily ascertained. 
One scarcely, therefore, prides himself on burning one sort, in 
preference to another. It is not equally easy to ascertain how 
much the marble of which his chimney is composed exceeds, or 
comes short, in the beauty, the variety, and arrangement, of its 
colors, the same sort of material made use of, for similar purposes, 
by his neighbors. Fancy here, stimulated by vanity, may raise 
the one more or less over the other, and according, therefore, to 
the strength of the passion will the assumed superiority be greater 
or less. Few things have qualities better fitted for the gratifica- 
tion of this passion than liquors. Their peculiar flavors and 
tastes are sufficient to distinguish them, and yet afford no room 
to determine how much the one exceeds the other. The imagin- 
ation, also, seems to have a peculiar power over the organs of 
taste and smell, and to be able, through the instrumentality of 
habit, to bring them to receive pleasure from what at first was 
indifferent, perhaps even disagreeable. Hence it is impossible 
to set any bounds to the superiority which one may acquire 
over another, from the influence of this passion ; and it may 
almost be laid down as a general rule with regard to them, that 
any one that is at all drinkable, becomes fit for being placed at 
the tables of the luxurious, by being carried a sufficient distance 


268 


OF THE NATURE OF STOCK. 


from the place of its manufacture. Thus, during the peninsular 
war, London porter was largely consumed in Spain by the very 
classes who, in England, reckon it a mark of vulgarity to drink it 
at all. 

It is not, indeed, to be disputed, that the rarity and costliness 
of the liquors, and other similar commodities consumed by an 
individual, may heighten greatly the absolute pleasure he derives 
from them. This arises from a trait in the character of man, 
which we have every day opportunities of observing. The 
attention is always roused in a greater degree by an object, when 
it excites more than one faculty. Two flowers together, the one 
having the beauty without the scent of the rose, and the other 
its scent without its beauty, would not afford so much pleasure as 
that plant. We prefer fruit that has a fine color; it absolutely 
tastes better. The taste is quickened by the additional stimulus 
which the eye’s being caught by the beauty of the color gives to 
the sensation, in the same way as a blow, long expected, is felt 
more than one coming unawares. In a similar manner, the mere 
costliness of wines, or meats, rouses the sense to a keener percep- 
tion of pleasure, by awakening the vanity ; and, when the indi- 
vidual is conscious of being a connoisseur in such matters, this 
very potent mover of our thoughts and sentiments is, besides, 
excited by the discernment shown in the discrimination, and by 
the familiarity thence implied with rare wines and meats, and, 
consequently, with what is called the best society. The slight, 
and, to another person perhaps, scarcely perceptible relish which 
the contents of the glass, or the dish, leaves on the palate, is 
seized and dwelt upon, and being associated and wrought up with 
more exciting and intellectual delights, is fixed in the mind of the 
sentimental epicurean as something infinitely surpassing what he 
would otherwise have conceived of it. Had pearls, when dis- 
solved in vinegar, produced a beverage that the imagination could 
possibly have transformed into a delicacy, how would it not have 
been extolled by the Romans ! 

The general consumption of any commodity by the vulgar 
lessens, on the contrary, in many minds, the pleasure it would 
otherwise give. It brings down the individual, in this particular, 
to a level with the lowest. This feeling gave rise to the excla- 
mation of a once celebrated northern Dutchess, “ What a pity 
that eggs were not a sixpence the piece.” 


OF THE NATURE OF STOCK. 


269 


The Roman moralists and satirists ground many of their invec- 
tives against the extravagance of the times, on the want of con- 
nexion between the qualities of the articles and the estimation in 
which they were held.* Heliogabalus confessed, that it was the 
relish which the dearness of the dishes gave to them, that led to 
the evtravagance of his table, and liked to have the price of his 
food overrated, because this sharpened his appetite. 

Were proofs wanting of how very slight grounds the taste has 
for its judgment, in declaring this to be delicious, and that beneath 
notice, we might find them in its variations in different times and 
places. It seems only content in preferring what is expensive. 
Yet, however different, each society in perfect sincerity believes 
its system the best. Who could relish now-a-days a Roman 
feast? Certainly, however, they believed that in cookery, as in 
other arts, they had attained the summit of real perfection. Of 
their good faith in this belief they gave a singular instance. A 
very expensive and much esteemed sauce was made by them 
out of the probably half rotten entrails of certain fish.! So con- 
vinced, however, were they of its superlative delicacy, that they 
had the care to make a formal law specially prohibiting its being 
given or sold to the barbarians.^ They were seriously fearful 
lest, should these rude warriors only taste it, it might so highly 
gratify their appetite, as to bring them down at once upon the 
empire. They came, notwithstanding, but neither they nor their 
more polished descendants seem to have found particular charms 
in the garum. 

We find the estimation of every article, whether of dress, of 

* Laudas, insane, trilibrem 

Mullum : in singula quem minuas pulmenta necesse est. 

Ducit te species, video. Quo pertinet ergo 
Proceros odisse lupos ? quia silicet illis 
Majorem natura modum dedit, his breve pondus. 

Hor. Sat. II. L. II. 

Interea gustus elementa per omnia quaeront, 

Nunquam animo pretiis obstantibus ; interius si 
Attendas magis ilia juvant quae pluris emuntur. 

Juvenal, XI. Sat. 

t Aliud etiamnum liquoris exquisiti genus, quod garon vocavere, intestinis 
piscium caeterisque quae abjicienda essent, sale maceratis ut sit ilia putrescen- 
tium sanies. — Nec liquor ullus paene praeter unguenta, majore in pretio esse 
caepit. Plin. lib. 31. c. 8. Nat. His. 

t The edict was in the time of the Emperors Valens and Gratian. Gold 
and wine were laid under a similar prohibition. 


270 


OF THE NATURE OF STOCK 


furniture, or of equipage, if to be seen by many, regulated also, 
in a very great degree, by the gratification it affords this passion. 
“ With the greater part of rich people, the chief enjoyment of 
riches consists in the parade of riches ; which, in their eyes, is 
never so complete as when they appear to possess those deci- 
sive marks of opulence which nobody can possess but themselves. 
In their eyes, the merit of an object, which is in any degree 
either useful or beautiful, is greatly enhanced by its scarcity, or 
by the great labor which it requires to collect any considerable 
quantity of it ; a labor which nobody can afford to pay but them- 
selves. Such objects they are willing to purchase at a higher 
price than things more beautiful and useful, but more common. 55 * 
Though its influence now, perhaps, is not so great as it was among 
the ancients, it is yet more apparent. The progress of art has 
been such, that there is scarcely any material, or fabric, or color, 
the production of which it does not so much facilitate as to bring 
it within the reach of a large mass of consumers. It then loses 
its value as a distinction, and ceases to serve the purposes of 
vanity. Hence arises the necessity for the variety, and seeming 
caprice, of fashion. What Adam Smith applies to one class of 
articles, will apply, in a great measure, to the whole expenditure 
of the opulent. “ When by the improvements in the productive 
powers of manufacturing art and industry, the expense of any 
one dress comes to be very moderate, the variety will naturally 
be very great. The rich, not being able to distinguish themselves 
by the expense of any one dress, will naturally endeavor to do 
so by the multitude and variety of their dresses . 55 f 

To attempt to enumerate the modes in which fashion varies 
the fitness of things for the purposes of its votaries, were little 
profitable, and is, I apprehend, superfluous, its extended influ- 
ence will hardly be disputed. “ What is the cause , 55 demands 
Mr. Storch, % “ that gives so high a value to the rare jewels with 
which opulence loves to deck itself? Is it the pleasure they 
give the eye, by the brilliancy of their reflected light ? No ; 
that slight enjoyment has no relation to their value ; it is because 
they attest the wealth of him who wears them. Such are all the 
objects of this sort of luxury : the amount of enjoyment they give 

* Wealth of Nations, B. I. c. XI. 

t Idem. B. IV. c. IX. 

t Cours d’Economie Politique, liv. VII. c. V. 


OF THE NATURE OF STOCK. 


271 


through the direct medium of the senses is nothing, in compari- 
son of that which they yield by the display that can be made of 
them to others — even objects which seem by their nature to 
have no other end but to please the senses, are almost altogether 
estimated by the gratification this display produces. Consider a 
sumptuous repast given by opulence, separate from it, in thought, 
every thing that serves only to show the riches of him who gives 
it, and leave nothing absolutely on the table but what may gratify 
the appetite of the individual : what would remain ? In short, 
if we take a general survey,” continues the same author, “ of all 
that expenditure which is made after the natural desires are satis- 
fied, we will perceive that it is almost altogether occasioned by 
the desire to appear rich.” * This desire of appearing superior 
to others thus keeps a vast number of things in a state of cease- 
less revolution. All this domain is under the rule of fashion. 

Diruit, sedificat, mutat quadrata rotundis. 

It destroys before its time, as Mr. Say complains, whatever it 
lays its hands on. “ Any thing which a person has provided 
himself with, to serve some useful purpose, is preserved as long 
as possible, its consumption is gradual. An object of luxury is 
of no use from the moment it ceases to gratify either the senses, 
or the vanity, of its possessor. It is destroyed, at least in greater 
part, before having ceased to exist, and without having supplied 
any real want ; — luxury has in abhorrence every profitable 
expense.” 

The expenditure occasioned by this desire falls on all classes 
of society. To supply it takes a large portion of the revenue of 
what are called the middle classes, of those who have difficulty 
to prove their claim to be so ranked, of those who are comfort- 
able in the lower classes, and even of those who have difficulty 
in procuring absolute necessaries. “ In all classes,” says Mr. 
Storch, “ the desire of show (le luxe d’ ostentation) has been 
able to identify itself with whatever serves the comfort or the 
conveniences of life. It is this which borders with a narrow lace 
the head dress of the country girl, and gives to her whole attire 
colors and a shape foreign to its utility.”! 

I should wish to apply, to the expenditure occasioned by the 

* Traite d’Economie Politique, liv. VII. c. IV. 

t Liv. VII. c. V. 


272 


OF THE NATURE OF STOCK. 


passion of vanity, the term luxury. Though that word has pro- 
perly a wider signification, it is perhaps the one that comes nearest 
to mark the thing we speak of. 

It is somewhat difficult to define precisely how far the limits 
of luxury, so understood, extend. It is a point which, probably, 
different people would fix differently. Whatever amount of 
pleasure any thing gives, that is entirely distinct from its rarity, 
or any association with that circumstance, certainly is not luxury. 
There is a pleasure in the sight of certain shapes and colors, and 
arrangements of them, which is quite independent of their cost ; 
there is a fitness, also, in the texture of certain fabrics, to pre- 
serve from the extremes of heat and cold, to add to the beauties 
of feature or form, and to correct their defects, that, of itself, gives 
pleasure; there are pleasures, too, which the mind creates to 
itself, out of the associations of these. We feel pleasure, in a 
cold day, in looking at a person well wrapped up in warm furs, 
as in a hot day, in seeing that one has no lack of clean linen. 
A nobleman of a right mind experiences gratification from seeing 
the clean sheets and warm blankets of the peasant, as well as 
when he enters and looks round his own sedulously arranged 
chamber. It is this feeling we experience when we say that 
such a house, or dress, has an air of comfort about it. The term 
has properly reference to the sensual, and to the benevolent, not 
to the selfish feelings. The sight of statues, paintings, flowers, 
is also capable of affording a high degree of gratification to many 
minds. The degree of pleasure thus experienced is different in 
different individuals, and it is scarcely possible to ascertain what 
its exact amount is in any one ; hence the difficulty, in most 
cases, of determining what is, or is not, luxury. Mr. Storch, in 
a chapter of his system from which I have already quoted, ob- 
serves : “ All the ornaments which decorate the apartments of 
the rich, that gilt work, those sculptures which art and taste 
seem to have formed solely to delight the mind, are nothing but 
a sort of magical characters, presenting every where this inscrip- 
tion : Admire the extent of my riches .” Vanity, there can be 
little doubt, is the predominating feeling prompting to the con- 
struction of such apartments ; it is not, however, the only one. 
Well executed statues, even elegant gilding, have certainly some- 
thing in themselves pleasing to the eye, and to the mind, of the 
beholder, whether owner or guest. The larger part of the grati- 


OF THE NATURE OF STOCK. 


273 


fication derived is drawn probably in most cases from vanity, and 
we occasionally meet with a character whose pleasures are alto- 
gether those of ostentation ; like Pope’s prodigal, 

Not for himself he sees, or hears, or eats, 

Artists must choose his pictures, music, meats; 

He buys for Topham drawings and designs, 

For Pembroke, statues, dirty gods, and coins ; 

Rare monkish manuscripts for Hearne alone, 

And books for Mead, and butterflies for Sloane. 

But, in most cases, real enjoyment mixes largely with mere 
vanity, in every expenditure of the sort. 

Adam Smith remarks, that “ It is not by the importation of 
gold and silver that the discovery of America has enriched 
Europe. By the abundance of the American mines those metals 
have become cheaper. A service of plate can now be purchased 
for about a third part of the corn, or a third part of the labor, 
which it would have cost in the fifteenth century. With the 
same annual expense of labor and commodities, Europe can 
annually purchase about three times the quantity of plate which 
it could have purchased at that time. But when a commodity 
comes to be sold for a third part of what had been its usual price, 
not only those who purchased it before can purchase three times 
their former quantity, but it is brought down to the level of a 
much greater number of purchasers, perhaps to more than ten, 
perhaps to more than twenty times the former number. So that 
there may be in Europe, at present, not only more than three 
times, but more than twenty or thirty times the quantity of plate 
which would have been in it, even in its present state of improve- 
ment, had the discovery of the American mines never been made. 
So far Europe has, no doubt, gained a real conveniency, though 
surely a very trifling one. The cheapness of gold and silver 
renders those metals rather less fit for the purposes of money 
than they were before. In order to make the same purchases, 
we must load ourselves with a greater quantity of them, and 
carry about a shilling in our pocket, where a groat would have 
done before. It is difficult to say which is most trifling, this in- 
conveniency, or the opposite conveniency.” * I suspect there is 
also a little exaggeration here, as the words of the author in 
another place would prove. “ If you except iron, the precious 


Wealth of Nations, B. IV. c. 1. 

35 


274 


OF THE NATURE OF STOCK. 


metals are more useful than any other. As they are less liable 
to rust and impurity, they can more easily be kept clean ; and 
the utensils, either of the table or the kitchen, are often, upon 
that account, more agreeable when made of them. A silver 
boiler is more cleanly than a lead, copper, or tin one ; and the 
same quality would render a gold boiler still better than a silver 
one.”* But, if we should admit that silver, as a commodity 
possessing many useful qualities, is valuable on other accounts 
than its scarcity, we must also grant that a very large share of 
other departments of the expenditure of the wealthy consists of 
mere luxuries, — articles, the sole gratification afforded by which 
is, that they alone can afford to possess them. It is then, I appre- 
hend with some truth, that, in another part of the Wealth of Na- 
tions, the author, in tracing the causes which brought on the 
diminution of the power of the great feudal lords, and ascribing 
them chiefly to their expending their revenues on the produce of 
foreign commerce and manufacture, instead of maintaining a large 
retinue, characterizes the bulk of the articles constituting this 
expenditure as useless for any other purpose than the gratifica- 
tion of a selfish vanity. “ All for ourselves, and nothing for 
other people, seems, in every age of the world, to have been the 
vile maxim of the masters of mankind. As soon, therefore, as 
they could find a method of consuming the whole value of their 
rents themselves, they had no disposition to share them with any 
other persons. For a pair of diamond buckles, perhaps, or some- 
thing as frivolous and useless, they exchanged the maintenance, 
or what is the same thing, the price of the maintenance, of a 
thousand men for a year, and with it the whole weight and 
authority which it could give them. The buckles, however, 
were to be their own, and no other human creature was to have 
any share of them; whereas, in the more ancient method of 
expense, they must have shared with at least a thousand people. 
With the judges that were to determine the preference, this dif- 
ference was perfectly decisive ; and thus, for the gratification of 
the most childish, the meanest, and the most sordid of all vani- 
ties, they gradually bartered their whole power and authority. 
Having sold their birthright, not like Esau, for a mess of pottage 
in time of hunger and necessity, but, in the wantonness of plenty, 


* Wealth of Nations, B. I. c. XJ. 


OF THE NATURE OF STOCK. 


275 


for trinkets and baubles, fitter to be the [playthings of children 
than the serious pursuits of men, they became as insignificant as 
any substantial burgher or tradesman in a city.” * Even here, 
too, there is some exaggeration; the seat of a wealthy modern 
nobleman exceeds the rude castle of his half barbarous ancestor, 
not only in the gratification it gives to the personal vanity of its 
possessor, but also in the refined enjoyments it affords its inmates. 
The exact proportion between the mere luxuries and the absolute 
enjoyments, in this as in other cases, is indeed impossible to 
ascertain. The former, however, undoubtedly make a very large 
portion of the total amount. 

As we descend in the scale, from the persons and mansions of 
those who have the fortune to possess hereditary wealth and 
hereditary claims to good society, to those who have themselves 
accumulated, or are employed in accumulating riches, and raising 
themselves to distinction, from thence to the lower grades of life, 
and, at last, to the mere drudges of the community, we shall find 
every step we take marked by a greater prominence in two cir- 
cumstances. The amount expended on what are neither the 
necessaries nor conveniences of life becomes less, but that expen- 
diture is more decidedly mere luxury. Taste gives enjoyment 
even to the wildest extravagance of those whose chief occupation 
has been to devise means to enjoy life, and to make it agreeable 
to others ; but he whose business has been, or is, to discover the 
best means of gaining wealth, though he may yield less to the 
desire of show, does so more thoroughly. He becomes a mere 
imitator, and, like most imitators, is apt to retain all the defects 
*and to drop much of the graces of his copy. 

Vanity is combated by the strength of the social and benevolent 
affections and intellectual powers. The former represent its 
excesses as hurtful, the latter as absurd. The same principles, 
therefore, which give strength to the effective desire of accumu- 
lation, diminish the sway of this passion. Hence, in all societies, 
where the effective desire of accumulation is high, and instruments 
consequently at orders of slow return, or only kept at orders of 
quick return from the progress of improvement, vanity and luxury 
will prevail but little ; while, in societies where the effective 
desire of accumulation is low, and instruments, not in conse- 


Wealth of Nations, B. III. c. IV. 


276 


OF THE NATURE OF STOCK. 


quence of superabundance of materials or recent improvements, 
but of the inability of the community to work up any but the 
best materials, are at orders of very quick return, such a state 
of things, indicating a weakness in the social and benevolent 
affections, and in the intellectual powers, is generally accom- 
panied by great strength, and the general prevalence of vanity 
and luxury. 

Savages, in general, are remarkable for the influence which 
vanity has over them, and for their propensity to give up any 
provision they may have made for the future, or to suffer severe 
privations, to have the means of decking their persons or habita- 
tions with something rare and costly, distinguishing them from 
others. Beads, bones, plumes of feathers, porcupine quills, gay 
colors, and all the rarities of their native abodes, are sought out, 
and wrought up by them with great labor. They besides cut 
their flesh, or tattoo their skin, the operation costs severe pain, and 
requires some skill, and the bearing the testimony of this outlay 
about with him is as real a gratification to the vanity of the savage 
as a diamond ring to that of an European. Their intercourse 
with civilized nations turns their desires towards fineries of Euro- 
pean manufacture. Glass beads, trinkets of silver, or, if it be not 
to be had, of tin, fine cloths, showy cottons and silks then make 
up a large part of their expenditure.* 

All travellers speak of the vanity of the Chinese, and of their 
propensity to show. Their glittering gilding, variegated silks, 
and crispy cows’ hair dyed red, with them the most splendid of 
ornaments, catch the eye of every stranger, and contrast strongly 
with the squalid poverty and misery that is the constant portion 
of a considerable part of the population, and occasionally invade 
the whole mass. One of the father Jesuits, in speaking of the 
necessity of his brethren’s changing their habits and style of 
living, observes, that, “ besides other reasons, they are obliged to 
conform to the general custom of the country ; that even indi- 
viduals of the common people, when they go to visit any one, 
dress themselves in silk, and have themselves carried in a chair. 
This does not pass with them for vanity, or affectation of gran- 
deur, but for an evidence that they esteem the persons whom 
they visit, and that they themselves are above absolute want, 
and are not in a despicable condition.”! This attention to a 

t Lettres Edificantes, vol. IX. p. 531. 


See note I. 


OF THE NATURE OF STOCK. 


277 


showy exterior seems to have led Mr. Ellis to form too high an 
estimate of the general opulence and comfort of the people. “ I 
have been much struck,” he says, “ in all Chinese towns and 
villages with the number of persons apparently of the middling 
classes ; from this I am inclined to infer a wide diffusion of the 
substantial comforts of life, and the consequent financial capacity 
of the country.” * 

The Romans are still more conspicuous instances of the ex- 
travagance into which this passion betrays nations. Vanity 
reigned throughout their expenditure. The decorations of their 
persons and mansions were a show of the most costly luxuries. 

“ Gemmas, marmor, ebur, Tyrrhena sigilla, tabellas 
Argentum, vestes Gaetulo murice tinctas.” 

The head, the neck, the arms, the fingers, of a Roman lady were 
loaded with jewels. Pliny relates that the jewels which Lollia 
Paulina, the wife of Caligula, even after her repudiation, carried 
on her person when attired simply for paying visits, were worth 
forty millions of sesterces, upwards of two hundred thousand 
pounds sterling. According to the same author, women of the 
greatest simplicity and modesty durst no more go without dia- 
monds than a consul without the marks of his dignity. The 
men, also, he tells us, wore on their fingers a variety of the most 
expensive rings, rather loading than adorning them. It was 
common to have tables and other articles of ivory, or of the 
precious metals. The plate and tables of Heliogabalus were of 
pure gold. ; Examples of their excessive luxury in articles for the 
table have been already given, and many more might be added, 
were it necessary to repeat what has been often narrated.f 

The magnificence of the eastern Empire was perhaps even 
greater than that of Rome itself. It reflected something of the 
excessive splendor of the Babylonish and other Asiatic monarchies. 
Chrysostom thus describes the palaces of the nobles. “ The roofs 
made of wood were gilt. The doors, even the long folding doors, 
were of ivory. In all the chambers the walls were incrusted with 
marble. If they were only of common stone, it was covered with 
plates of gold. The beams and ceilings were gilt, and the apart- 

* Embassy to China, Phil, edition, 1818, p. 237. 

t The reader may consult Gibbon, or the work of M. d’Arnay sur la vie 
privee des Romains. 


278 


OF THE NATURE OF STOCK. 


merits were inlaid with small stones, and often with precious stones. 
Over the floors were sometimes spread very rich carpets. Their 
taste for magnificence could bear nothing of the ordinary kind. 
In the rooms were great pillars of marble, with their chapiters 
gilt, and sometimes the whole pillars were gilt, statues by the 
most excellent artists, pictures and mosaic work. The beds 
were usually of ivory or of wood, gilt or covered with silver 
plates, and sometimes of solid silver decorated with gold. All 
the furniture was surprisingly rich. The chairs and benches 
were of ivory ; the pots and other vessels, even for the meanest 
uses, were of gold and silver.” # 

Mr. Say has remarked, that there is a large part of the con- 
sumption of the French, which is occasioned by their excessive 
attention to mode and fashion, and that, in this respect, they con- 
trast disadvantageously with the English, who pay more attention 
to comfort and convenience, and less to the changing fancies by 
which vanity seeks to distinguish itself. Instruments have never, 
in France, been wrought up to orders of so slow return as in 
England. 

I believe it will be found that the strength of the effective de- 
sire of accumulation, is higher among the working classes in 
North America, than in Europe. The influence of vanity in 
many cases, is certainly less. The consumption, for instance, of 
coarse unbleached cotton, for shirting, is very great; this is cer- 
tainly a more comfortable wear for a working man than the finer 
sorts. It washes more easily, and endures more fatigue .f The 
finer cottons, also, of American manufacture, are of a stouter 
and more substantial fabric, indicating that the American pur- 
chaser looks more to the wear of the article, the European to the 
delicacy of the fabric. The same thing may be said of woolens. 
A substantial farmer in England would scarcely, as one of the 
same class in North America, think himself decently clad in a 
winter’s suit of which the cloth cost only a dollar per yard, though 
a comfortable and durable dress. 

* Chrysostom quoted by Jortin, Ecclesiastical History, vol. II. p. 359. 

t Until about two years since almost all Upper Canada and the eastern 
townships of Lower Canada, were supplied with American cottons of this 
sort smuggled over. Patterns were sent to Manchester, and imitation Ameri- 
can cottons got out, which now supply the Canadian side of the line ; they 
do not, however, as far as 1 have been able to learn, pass to the other. 


OF THE NATURE OF STOCK. 


279 


It is to be observed, that, as vanity is opposed by the social 
and benevolent affections and intellectual powers, according as 
the one or the other of these preponderates, the manifestations 
of that luxury which yet remains, are modified into some resem- 
blance to what it approves. When the intellectual powers are 
strong, this passion endeavors to elude them by attaching itself to 
objects that it can represent as of permanent excellence. When 
the benevolent affections are powerful, it endeavors to gain its 
ends, by representing them as proceeding from a wish to gratify 
others, and to share with them things, which are at least gener- 
ally esteemed rare and valuable. In the former case it escapes 
opposition, and finds vent in expensive buildings and decorations ; 
in the latter in sumptuous entertainments, and luxuries of the 
table. “ In Holland,” says Mandeville, “ people are only sparing 
in such things as are daily wanted and soon consumed ; in what 
is lasting they are quite otherwise ; in pictures and marble they 
are profuse ; in their buildings and gardens they are extravagant 
to folly. In other countries you may meet with stately courts 
and palaces of great extent that belong to princes which nobody 
can expect in a commonwealth, where so much equality is ob- 
served as there is in this ; but in all Europe you shall find no 
private buildings so sumptuously magnificent, as a great many 
of the merchants’ and other gentlemen’s houses are in Amster- 
dam, and some other great cities of that province, and the gener- 
ality of them that build there, lay out a greater proportion of 
their estates on the house they dwell in, than any people upon 
the earth.” * Something of the same genius may, I think, be 
observed in the expenditure of the North Americans. Their 
houses are frequently larger than they have use for, so that part 
of them remains unoccupied. They are, also, often built with a 
greater regard to show than comfort. There is little substantial 
difference between a gold and silver watch, but that the former 
costs double of the latter. Gold watches are perhaps more com- 
mon in North America, than in any other part of the world. It 
is pure vanity that leads, to so general an adoption of this luxury, 
by classes who in England would not think of it, but it is a vanity 
that fixes itself on something permanent. In the end, there is 
no cheaper way in which a man can write, “ I am rich, or at least, 


* Remark Q, Fable of the bees. 


280 


OF THE NATURE OF STOCK. 


I am not absolutely poor,” than to carry a gold watch. It is 
ready to meet all occasions, and all persons.* In Britain, on the 
other hand, the luxuries that mix themselves with the virtues of 
hospitality are more apt to prevail. There rare wines, and refine- 
ments in the dainties of the table are more common. 

Besides the varied character with which the various strength 
of the passion stamps different people, there is a difference, in 
this respect, in the same people, between the agricultural popula- 
tion and the inhabitants of cities, which the following sagacious 
remarks of Montesquieu seem to me sufficiently to explain. 

The extent of luxury farther depends on the size of towns, 
and especially of the capital. In proportion to the populousness 
of towns, the inhabitants are filled with notions of vanity, and 
actuated by an ambition of distinguishing themselves by trifles. 
If they are numerous, and most of them strangers to one another, 
their vanity redoubles, because there are greater hopes of suc- 
cess. As luxury inspires these hopes, each man assumes the 
marks of a superior condition. But, by endeavoring thus at dis- 
tinction, every one becomes equal and distinction ceases ; as all 
are desirous of respect, nobody is regarded.” f 

In the country it is different ; every one is known, and no one 
can succeed in passing himself off for other than he is. In town 
Molly Seagrim would have been admired as a fantastical fine 
lady; in the country she got herself mobbed. To account for 
the difference, which we every where see between the dissipa- 
tion of the town and the economy and frugality of the country, 
we have only to consider, in addition to this, that in the country 
there are always considerable facilities and encouragements, for 
even the poorest to form instruments, unless in very anomalous 
cases, such as that which the abomination of the poor laws has 
introduced into England. In the country the poor man can de- 
vote all his spare time, perhaps his only disposable fund, to the 
cultivation of some plot of ground, to repairing his house, working 
in his garden, and procuring food for his cow or his pig. He is 
induced and enabled to placd out all his little savings, as they 
come in, on some profitable investment.! Similar circumstances 

* These observations apply to the population of British descent or birth on 
both sides of the line. 

t Esprit des Lois, B. VII. C. 11. 

t One who has happened to reside in any part of Scotland, where facilities 


or THE NATURE OF STOCK. 


281 


operate similar effects on the man in middling circumstances, and 
even on the rich man. It is the town, especially the metropolis, 
that is the ruin of landed proprietors. 

We may also, in a similar manner, explain the tendency of 
new countries to engender industry and frugality. The very 
scattered state of the population effectually keeps down vanity ; 
the absolute necessity of working up the materials within reach, 
rouses the accumulative principle to action, and the abundance 
of these materials stimulates it to unremitting exertion. There 
is hence no better school for the dissolute European than the 
back woods. After a dozen years’ residence in them, or in the 
clearings to which he has helped to convert them, he comes out 
a completely altered man. 

It is perhaps proper to observe here, that no blame can attach 
to individuals, for compliances with the follies to which the passion 
of vanity prompts. It were a great mistake to imagine that even 
its absurdities are easily avoidable. It is in vain for any one man 
to oppose general opinions and practices, however ridiculous. If 
he does so, he is sure to encounter greater evils than a compli- 
ance with the customs of the society would inflict. It is the 
business of the poor man to stand well with the world, else he 
will scarcely make his way through it. It is his business, too, to 
avoid a display of poverty. One is sure to have most friends 
when they least need them. “Pour s’etablir dans le monde,” 
says Rochefoucauld, “ on fait tout ce qu’on peut pour y paroitre 
etabli.” 

“ Notwithstanding my poverty,” writes a Jesuit missionary 
from China, “ I have yet been able to relieve the extreme misery 
of two poor Christians. The one had his house, his furniture, 
and his implements of trade, destroyed by fire. The other was 
by profession a physician, and some thieves had in the night 
carried off his silk dresses ; they might as well have stolen his 

of this sort exist, must have had opportunities of observing very remarkable 
instances of the indefatigable industry they excite. Tracts of land, so very 
barren and impracticable as to seem condemned to perpetual sterility, may 
be seen in process of being converted into fertile soil, by being let out in 
small patches at very long or perpetual leases. A portion of the estate of 
Pilfoddles, near Aberdeen, almost a continuity of rock, was, I recollect, 
so reclaiming about fifteen years ago. Those small feus, as they are termed, 
are taken by laborers, who work on them at spare hours when their other 
occupations fail them. 


36 


282 


OF THE NATURE OF STOCK. 


profession and his reputation ; for here a physician, unless dressed 
in silk and cow’s hair, passes for ignorant, and is employed by no 
one.” The doctor who had lost his silken robes was probably 
worse off than the mechanic ; the former was still in a condition 
to find work, the latter was not. He probably, indeed, had 
nankin left; but had he dressed in it, especially had he pretended 
to say it was the more comfortable wear, he would have acted 
about as wisely as w’ould a poor young M. D. in England who 
should, in cold winter days, attire himself in dreadnought. Who 
would trust a case to so absurd a mortal ? 

The man of independent fortune, again, though he need fear 
no very serious evils from setting himself in direct opposition to 
received modes of extravagance, will yet certainly incur the 
charge of eccentricity, perhaps of niggardly parsimony. These 
are small inconveniences, but he consults his ease in avoiding 
them. 

A person is then only properly guilty of inflicting an injury on 
the community, when he runs into both acknowledged extrava- 
gances and real luxuries. He is censured by some, but envied 
and followed by others. An individual may, on the other hand, 
somewhat advance the prosperity of the whole society, or at least 
of the order in it in which he is himself ranked, by checking his 
vanity when it urges him to adopt luxuries, permitted to his for- 
tune, though not demanded by it. The nobleman who, in equi- 
page and lackeys, keeps somewhat within the limits which his 
revenues would afford ; the tradesman’s wife, who dresses in 
calico instead of silk, are both, to a small extent, public benefac- 
tors. Luxury, indeed, generally advances or recedes slowly, 
and can scarce be successfully encouraged or opposed but by 
degrees. There is always, and in every society, one line, to go 
beyond which is acknowledged extravagance, and another, not 
to come up to which is accounted sordid parsimony. Crassus 
was ashamed to use some of his plate, the cost, even to him, 
appeared too great.* It is invidious to run to expenses which 
others cannot follow, and his guests would have felt themselves 
too much outshone. He would have been more severely cen- 
sured, had he ventured to entertain them in the simple style of 
their ancestors. 

* L. vero Crassus orator duos scyphos Mentoris artificis manu cselatos — 
sestertiis C. — Confessus tamen est, nunquam se his uti propter verecundiam 
ausura. Plin. Hist. Nat. 1. XXXIII. c. 11. 


OF THE NATURE OF STOCK. 


283 


It were very difficult to discover a society where vanity does 
not more or less direct the necessary expenditure. Could this 
be done, we should there find things estimated solely by their 
physical qualities, and as these differ greatly, there would be 
great differences in the estimate made of each. Whatever could 
really set forth to advantage the beauty or grace of form or 
feature, would be proportionally prized, as would real beauty in 
articles of furniture, and in the form and decorations of apartments. 
But under this supposition, other circumstances being equal, that 
would always be preferred which was cheapest. If two articles, 
therefore, were presented, of which the one was of much greater 
real beauty than the other, but also much more expensive, though 
it might be that the former would be preferred, its high cost 
would be esteemed a defect, and would proportionally diminish 
the pleasure yielded by it. Very expensive articles would, if 
possible, be avoided. A very costly dress, for instance, would 
affect the mind of such spectators disagreeably, as auguring either 
\ a want of taste, or want of beauty in the wearer, requiring much 
adventitious aid to help out the deficiency. It would produce a 
disagreeable feeling, somewhat similar to that caused by the view 
of a profuse expenditure of animal power, bringing about only a 
small effect, and impressing, therefore, with an idea of defective 
mechanism. In such a society the notions of most people, and 
therefore the general rules of conduct, would in this respect be 
completely different from what they generally are. 

Sometimes, though rarely, this passion instead of leading to dis- 
sipation, has an effect similar to an enlarged providence, and causes 
the formation of instruments of slowly returning orders. This is 
chiefly remarkable in buildings intended to be permanent. If the 
materials and workmanship of these are not substantial, and such 
as insure durability to the edifice, the defect is commonly per- 
ceptible, and is ridiculed as proceeding from poverty, or from 
dread of expense. The vanity of the rich man, therefore, here 
excites him to work for succeeding generations, that he may give 
the present a high idea of the extent of his resources. He 
besides, in this way, hopes to make it apparent to his cotempo- 
raries, that a monument of his prosperity and magnificence will 
descend to future times. The same observation will apply to 
public works undertaken by a proud and extravagant govern- 
ment. Vanity is always an operator in their formation, and 


234 


OF THE NATURE OF STOCK. 


therefore their construction is never altogether regulated by the 
strength of the accumulative principle, nor are they instruments 
of the orders which it would indicate. “ The proud minister of 
an ostentatious court may frequently take pleasure in executing 
a work of splendor and magnificence, such as a great highway, 
which is frequently seen by the principal nobility, whose applause 
not only flatters his vanity, but even contributes to support his 
interest at court. But to execute a great number of little works, 
in which nothing that can be done can make any great appear- 
ance, or excite the smallest degree of admiration in any traveller, 
and which, in short, have nothing to recommend them but their 
extreme utility, is a business which appears in every respect too 
mean and paltry to merit the attention of so great a magistrate. 
Under such an administration, therefore, such works are almost 
always entirely neglected.”* It is, however, to be observed, 
that in regulating public works, and other public affairs, men 
ought to pay more attention to the concerns of a distant futurity 
than in the management of their private affairs. A century is a 
small part of the existence of a nation, though it includes that of 
several generations of individuals. In statesmen, therefore, in 
the affairs of states, the accumulative principle should be strongs 
Great durability, consequently, in public works, is always desira- 
ble. In like manner governments should borrow on different 
principles from individuals. No one, for instance, now disputes 
that it should have been the policy of Great Britain to have bor- 
rowed as much on long annuities as possible. The misfortune 
is, that statesmen generally think of themselves more than of 
their country, and instead of grappling with present evils, let 
them grow, content if they grow quietly and imperceptibly, and 
do not threaten to deprive them of the gratification of maintaining 
the pride of their power' for a few years’ political triumph. This 
consideration may in part explain the cause of the great durability 
of public works in China. It shows that the paternal charac- 
ter of the government is in some measure a reality. I suspect, 
however, that the contrast between the construction of public 
and private works there, is more apparent from the diminishing 
strength of the accumulative principle in that great Empire. I 
shall presently have occasion to adduce some reasons for this 
conjecture. 


Wealth of Nations, B. V. c. I. 


OF THE NATURE OF STOCK. 


285 


It is perhaps here worthy of remark, as serving to show that 
ostentation and extravagance have very little connexion with 
any other species of enjoyment, but that which places its gratifi- 
cations in some superiority over others, that in proportion as 
nations are addicted to vanity and luxury, their range of bodily 
enjoyments seems to become less. Cleanliness, for instance, 
may be said to be a refined sensuality ; it is a real enjoyment, on 
which the self-mortified ascetic wastes not his care ; and we find 
that least attention is paid to it by the vain, and most by the 
provident, so that other things being equal, where the effective 
desire of accumulation is high, there it is most scrupulously ob- 
served ; where it is low, it is little regarded. 

The North American Indians seem really not to have any 
notion of its existence. It appears to them, in other people, as 
an affected and unaccountable scrupulosity,* The Chinese are 
described as disgustingly filthy. The Romans were certainly, 
as may be gathered from various passages in the Latin writers, 
far from being what we would esteem cleanly. An English 
gentleman would not think of writing to his friend that if he 
dined with him he should find well-washed dishes. 

Ne non cantharus et lanx 

Ostendat tibi te ; t 

Horace introduces a fanciful epicure, complaining of unwashed 
goblets, want of table napkins and saw dust, as taking away from 
the pleasures of a sumptuous feast 4 In modern times Holland has 
been esteemed the country of cleanliness; England perhaps 
ranks next. 

Improvement can never facilitate the production of mere luxu- 
ries. It cannot do so because it is not the thing itself, but merely 
the quantity of labor embodied in it that vanity prizes. Diminish 
the labor necessary for its production, and you take away what 
this passion covets. It will, therefore, either consume a propor- 
tionally larger quantity of the commodity, or will turn itself for 
its gratification to other commodities of greater rarity, which a 
greater amount of labor that is, or some equivalent to it is neces- 
sary to purchase. 

* See note J. 

t Hor. Epist. Liv. I. V. 

X Sat. IV. L. II. The Romans, it is true, bathed frequently, but then they 
had neither soap nor linen, and woollens were high priced. 


286 


OF THE NATURE OF STOCK 


Pearls, as ornaments, probably derive nearly their whole value 
from their scarcity. Reduce their price to one half, and the 
quantity worn to produce the same effect would require to be 
doubled. Render them obtainable for a trifle, and they could 
be no longer worn. It has been more than once attempted to 
cultivate them, that is to make the oyster that produces them, 
bear them universally and plentifully. Linneus conceived it 
practicable by pricking the animal, and other managements, but 
the scheme has never succeeded. Had it done so fully, it had 
certainly been useless. Suppose it had diminished the labor 
necessary to procure them by one half, then a lady to be as richly 
dressed as before, would just have had to carry double the num- 
ber. Had the facility been farther increased, so that they be- 
came as plentiful as glass beads, they would then have become 
as useless. If every peasant girl could afford to have a string of 
them, no lady would wear them, and when ladies ceased to wear 
them, peasant girls would lay them aside.* It is the same with 
all other articles that are mere luxuries. As they only serve for 
marks of the riches of the individuals possessing them, every 
diminution made in the labor embodied in them diminishes, in 
a proportionate degree, their fitness for the purpose for which 
they are employed. Should topazes become as plentiful as 
cairngorums they would be no more esteemed. 

There are few commodities, however, in which utility, as well 
as vanity, has not a considerable share. On such the effects of 
improvements are twofold. As far as they possess inherent 
utility, it tends to carry them first, and subsequently all other 
instruments in the society, towards the more quickly returning 
orders. In so far again as they are mere luxuries, it renders a 
greater quantity of them necessary, or unfits them altogether for 
the supply of the demands of vanity. There is hence a sort of 
strife between the two principles, the one seeking to disparage 
and discard such commodities, the other to retain them. The 
result seems mainly determined by the proportion of the one, or 
the other sort of qualities, existing in the article in question, and 
by the degree in which its consumption is apparent. It may 

* “ The price of pearls in modern times has very much declined; partly, no 
doubt, from change of manners and fashions ; but more probably, from the 
admirable imitation of pearls that may be obtained at a very low price.” Mc’- 
Culloch’s Dictionary of Commerce. They are also less worn. 


OF THE NATURE OF STOCK. 


287 


have so many useful and agreeable qualities, that however easily 
obtained, or however openly consumed, it cannot be driven out 
of use. All that vanity can do with regard to such articles, is, 
to consume them when they are most scarce. Some of the Ro- 
mans never ate fish but when at a distance from the sea, nor 
flesh but when on the sea-shore. Green peas become luxuries 
at Christmas. Should the best flannel cost only two pence a 
yard,, it would still be worn by all who now wear it, and by many 
who do not. Its consumption is not conspicuous. On the con- 
trary, were any particular fine fabric of cotton presently used for 
gowns, t and costing two shillings per yard, in consequence of im- 
provement to be sold for two pence per yard, it could no longer 
be worn. It would no longer be dress for any rank, and its con- 
sumption would therefore diminish or cease. About ten years 
ago, what are called leghorn bonnets were fashionable, and much 
worn in Canada and the United States. They then cost three 
or four pounds. They may be had now for a few shillings, and 
no one wears them; straw which were then disused but by the 
less wealthy, are now preferred; they are dearer and less durable. 

People who regard appearances, and are accustomed to see 
and be seen, can scarce expect that any improvement will mate- 
rially diminish their yearly outlay for dress, for themselves or 
families. Whatever proportion of their revenues they may have 
found it necessary so to expend, in order to maintain the appear- 
ance their rank required, they may fairly reckon they will have 
to expend in future. The gentleman, the tradesman, the lady, 
the servant girl, must alike obey the laws which the strength of 
this principle imposes on the society. Whatever advance im- 
provement may make, they must still lay their account with being 
looked down on by their respective associates, or having to wear 
garments just as expensive as ever, without being better looking, 
or more comfortable, in a degree answering by any means to the 
facilities of fabrication effected by the successful efforts of inven- 
tion. In so far as their dress is a mark of their riches, a sort of 
inscription they bear about with them, as Mr. Storch expresses 
it, serving to impress others with the belief of their possessing a 
certain amount of wealth, or holding such a rank in society, it is 
exactly analogous to coin. Double the facility of production, the 
quantity carried about, to answer the same purpose, must be 
doubled, or recourse must be had to some other material. Pur- 


288 


OF THE NATURE OF STOCK. 


pie, or scarlet, served among the Romans for a mark of this sort ; 
only the rich could afford to wear it. Although still admired as 
a color, it no longer serves the purpose, and is comparatively 
little used. Lace, among the moderns, was once a mark of the 
same kind. Invention has so far facilitated the production of 
some sorts of it, that the wearing them no longer confers distinc- 
tion. Increase that facility, till a yard of the finest sorts may be 
had for a few half pence, and it is questionable if the beauty of 
the fabric would preserve it as an article of dress wearable by 
any one.* 

To articles of furniture, of diet, to the equipage of the rich, 
and to the whole apparent expenditure of every class, similar 
observations will apply. A greater or less part of the effects of 
improvement, is absorbed by vanity in them all, and conse- 
quently lost. 

* “ At Hornton, in Devon, the manufacture had arrived at that perfection, 
was so tasteful in the design, and so delicate and beautiful in the workman- 
ship, as not to be excelled by the best specimens of Brussels lace. During 
the late war, veils of this lace were sold in London from twenty to one hun- 
dred guineas ; they are now sold from eight to fifteen guineas. The effects 
of the competition of machinery, however, were about this time felt; and in 
1815, the broad laces began to be superseded by the new manufacture. Steam 
power was first introduced by Mr John Lindsey, in 1815-16; but did not 
come into active operation till 1820. It became general in 1822-23; and a 
great stimulus was at this period given to the trade, ovying to the expiration 
of Mr. Heathcoat’s patent, the increased application of power, and the perfec- 
tion to which the different hand frames had by this time been brought. A 
temporary prosperity shone on the trade; and numerous individuals — cler- 
gymen, lawyers, doctors, and others — readily embarked capital in so tempt- 
ing a speculation. Prices fell in proportion as production increased, but the 
demand was immense ; and the Nottingham lace frame became the organ of 
general supply, rivaling and supplanting, in plain nets, the most finished pro- 
ductions of France and the Netherlands. Lace, having become a common orna- 
ment, easily accessible to all classes, has lost its attractions in the fashionable 
circles, by which it was formerly patronized, so that very rich lace is no longer 
in demand. And many articles of dress, which, in our drawing rooms and ball 
rooms, lately consisted of the most costly and tasteful patterns in lace, are 
now either superseded or made of different manufacture. — Many of the em- 
broiderers in Nottingham are at present unemployed ; and even for the most 
splendid and beautiful specimens of embroidery, some of which have occupied 
six weeks, working six days a week and fourteen hours a day, the young women 
have not earned more than one shilling a day. The condition of the plain 
lace workers is still more deplorable — they cannot obtain more, on an average, 
than two shillings and six pence a week, and working twelve or fourteen 
hours per day, for their anxious and unremitting labor.”! 


t McCulloch’s Dictionary of Commerce. 


OF THE NATURE OF STOCK. 289 

In as far again as any article is not a luxury, in as far as it is 
beyond the reach of vanity, and consumed to supply some real 
want, not to display superiority, in so far improvement is really 
felt. Were invention to discover some substance having all the 
properties, and the exact appearance of good leather, and capa- 
ble of being formed for one sixth of the outlay, it would be an 
effort of that power very sensibly felt. Boots would probably 
indeed cease to be worn by the higher classes, unless when on 
horseback, but good shoes cannot be dispensed with by any class. 
They are worn for comfort, not for show, and the diminution in 
the outlay necessary to procure them, would constitute a real 
improvement. Improvements in mining and modes of transport- 
ing coal, diminishing the labor necessary to bring them to market, 
are also sensibly felt, they facilitate the supply of real wants, and 
move instruments towards the more quickly returning orders. 
Improvements in the manufacture of iron, also escape vanity and 
are real. Could ingenuity discover a method of quarrying stones 
and reducing them to shape, or of making bricks at one half of 
the present outlay, it would be a real improvement : only a small 
part of it would be lost on vanity ; for, unless in the highest 
classes, a dwelling-house is much more for comfort than for show. 
Could the substance of potatoes be converted into an article ex- 
actly similar to wheaten flour, and requiring only half the outlay, 
that would also be a very great improvement. Improvements 
too in the fabrication of articles of glass, and earthen ware, are 
in a great degree real. Could the manufacture of plate glass be 
so facilitated, that it might be had for only double the price of 
common window glass, the substitution of the one for the other 
could not be called a luxury, but a real improvement, an increased 
provision for the supply of future wants. In Great Britain inge- 
nuity has succeeded, in recent years, in very greatly facilitating 
the manufacture of cotton fabrics. The increased facility of pro- 
duction has in part effected a real improvement, but certainly has 
in a great measure also been absorbed by vanity. Much less 
labor is now necessary to produce articles of dress of this material 
which are not seen, or are but little seen ; but for dresses worn 
in public, the expenditure is certainly not diminished, or the 
beauty or comfort of the article increased, in proportion to the 
increased facility of production. The finer sorts of these stuffs 
are perhaps produced with ten times the facility they were twenty 
37 


290 


OF THE NATURE OF STOCK. 


years ago, yet probably the whole annual expenditure which a 
young female makes for such part of her apparel as is formed of 
these stuffs, is little less than what her mother, twenty years ago, 
was accustomed to make, and certainly she is not ten times more 
becomingly or more comfortably clad. The great cheapness 
indeed of even the finest and most delicate of these fabrics, is 
such that vanity seems to be discarding them. The utmost 
efforts of ingenuity can scarcely embody a sufficiency of labor in 
them, or vary them so as to make them a fit full dress for even a 
tradesman’s wife. 

All luxuries occasion a loss to the society, in proportion to 
their amount. The industry employed in their formation, gen- 
erates no provision for future wants, and may be said to be ex- 
pended in vain. Taking the whole society as a body, it supplies 
no wants. It gives no absolute enjoyment, it is all relative, as 
much as one is raised by it, another is depressed, the superiority 
of one man being here equivalent to the inferiority of another. 
To increase the facilities of production of luxuries, therefore, brings 
no addition to the absolute capital. It is precisely analogous to 
increasing the facilities for the production of the metals used for 
coin, merely adding to the bulk circulated, and not enabling it in 
any degree to perform its office better. The expense, too, occa- 
sioned by keeping up the circulation of the one and the other, 
and consequent diminution of the national revenue, is equally a 
loss. It is much greater, however, in the case of luxuries than 
of coinage, because the whole amount of the former, in all socie- 
ties, is probably much greater than that of the latter ; and because 
it consists, in general, of materials far more easily destroyed. To 
the loss thus occasioned by vanity the term dissipation may be 
applied. Its amount cannot, for reasons already stated, be easily 
ascertained, nor is it necessary for our purpose that it should. It 
is sufficient to observe, that, in all societies which have hitherto 
existed, it has been considerable ; and that it seems to be deter- 
mined, in every society, by the strength of the selfish, and weak- 
ness of the intellectual powers and benevolent affections ; and, 
consequently, that it is inversely as the strength of the accumu- 
lative principle. 

Though vanity, in this way, operates directly to retard the 
increase of the stock of the society, some of its indirect effects 
have, notwithstanding, an opposite tendency. As an antagonist 


OF THE NATURE OF STOCK. 


291 


to the restraining influence of the spirit of imitation, it is often a 
very useful auxiliary in the spread of inventions. These, without 
its aid, might perhaps have been often shut up in the countries 
where they were discovered ; certainly they would not have 
passed from region to region, so rapidly as they have sometimes 
succeeded in doing. Under the guise of foreign rarities, and 
consequently luxuries, they have made their way easily; the 
mask rubbing off by time, a substratum of utility has been found 
under it. 

Soap seems to have been first made in the midst of the ashes 
and tallow of Germany and Gaul. It came to Rome as a luxury, 
in the shape of a pigment for the hair. In the course of time, its 
superior detergent qualities becoming apparent, and the manu- 
facture being introduced, this article, so essential to the comfort 
of the modem European, passed entirely out of the rank of luxu- 
ries. Vanity brought silk to Europe. At first it was almost 
entirely a luxury. As a garment it has often more beauty than 
any other texture ; but when it exchanged for its weight in gold, its 
beauty must have constituted but a small part of the enjoyment 
derived from the wearing of it. In some fabrics it is scarcely now 
a luxury ; its qualities of durability and beauty seem to give it a 
real superiority, sufficient to render the superior price paid for it 
no dissipation. Increase that facility very much, and some of 
these fabrics would be discarded by vanity. Were velvet to 
become as cheap as cloth, it would not be worn by the higher 
classes ; its greater durability would make it too economical for 
them, and its adoption by the lower would render it vulgar. 
Fabrics of cotton were at first luxuries. They would not, per- 
haps, have been worn had they not had rarity, and consequently 
vanity, to recommend them. Cashmere shawls are so now ; in 
time they too may cease to be so. The process, indeed, has 
made some progress in France, where, I have been told, the 
breed of the animal yielding the wool has been introduced, and 
the manufacture considerably advanced. 

Vanity, also, sometimes facilitates real improvement, by the 
high estimate it gives to articles that are mere luxuries, but con- 
tain the rudiments of extensive utility. It thus stimulates inven- 
tion to facilitate their production, develope their utility, and put 
them out of the class of luxuries. 

Glass was at first a luxury. It was prized by the Romans for 


292 


OF THE NATURE OF STOCK. 


show, as glass beads are now by savages. Ingenuity at length 
perfected the various processes of the manufacture, and made it 
an article extensively supplying real wants. The diamond is at 
present chiefly a luxury; should art ever succeed in giving at will 
a crystalline structure to simple carbon, so, as to convert it into 
that substance, it would pass from the rank of luxuries, and would 
too contribute largely to the supply of real wants. The high 
estimation in which it is held serves at present to turn the atten- 
tion of ingenuity to such a project. 

These, however, are indirect, and, as it were, accidental effects 
of luxury ; its direct operation is always to dissipate a part of the 
national funds proportioned to its strength. 

The different effects arising from the action of the inventive 
faculty, as it operates on utilities or luxuries, afford a means of 
distinguishing the one from the other. The progress of invention 
extends the consumption of utilities ; it diminishes the consump- 
tion of pure luxuries. Were steel, platina, or plate glass, pro- 
duced by one tenth of the labor they presently cost, their con- 
sumption would be very much increased. Were pearls, or lace, 
to be got for one tenth of the labor that must now be given for 
them, they would go completely out of fashion. The additional 
amount of utilities produced, occupying the place of instruments 
that cost more labor, and did not return more abundantly, their 
consumption implies a diminution in the cost of the whole stock 
of the society as compared with the returns made by it, and 
consequently the progress of that stock to an order of quicker 
return. The facility given to the production of luxuries has 
rather a contrary effect, exciting to the greatest outlay of labor 
of which the accumulative principle is capable, previous to the 
abandoning of the manufacture. 

PART II. 

In the preceding part of this chapter we have considered the 
loss occasioned to the stock of societies, from part of the products 
that would otherwise be yielded by the industry of their members, 
applied to the formation of instruments, being dissipated through 
the operation of an affection of the mind. We are now to con- 
sider a similar loss, occasioned by a peculiarity in the combined 
corporeal and mental constitution of man. 


OF THE NATURE OF STOCK. 


293 

There are various matters that physiologists have attempted 
to comprehend under the general term of narcotics, of which the 
primary operation is directed to the nervous system. What their 
ultimate effects may be on man, considered not in the individual, 
but in the species, this is not the fit place to discuss. ' There are, 
however, some general laws that belong to them, which it con- 
cerns the present inquiry to notice. 

1. A gradual increase in the quantity consumed does not pro- 
duce a correspondent increase in the effects first experienced. 
One commencing with twenty drops of laudanum, if he make a 
habit of consuming that drug, and attempt to continue the effects 
first experienced, must double, quadruple, or farther increase the 
quantity. A few glasses of wine will at first cause a degree of 
exhilaration equal to what it will take a bottle or two finally 
to produce. Unlike things consumed to satisfy hunger, thirst, 
or warmth, their effects are by no means determined by the 
quantity consumed. We may reckon that a slice of bread, 
or a glass of water, will one year hence supply the wants for 
which any individual consumes them, as well as now, however 
great his consumption of these articles may be in the interim. 
But if a person now daily drinks a glass of brandy, there is no 
saying how many glasses, ten years hence, he may find himself 
obliged to take to produce the same effects. This is a property 
common to all narcotics, though not in an equal degree. The 
effects of tea and coffee on the nervous system diminish through 
use, as well as those of brandy and tobacco, though not in an 
equal degree, and the quantity taken may be gradually very 
greatly augmented. 

2. The temporary exhilaration produced by the consumption 
of these substances is followed by a temporary depression. They 
produce evil as well as good. Whether, when taken in small 
quantities, the former overbalance the latter, or the latter the 
former, is a point undetermined ; but it is well known that as the 
quantity is increased, the evil effects predominate, until at last 
both the bodily and mental energies sink under their operation. 
Hence what is called the abuse, to which the consumption of all 
this class of commodities is apt to lead. The labor bestowed on 
them is very often not only useless, but absolutely prejudicial to 
the society. 

3. Their consumption is regulated, in a great degree, by the 


294 


OF THE NATURE OF STOCK. 


influence of the imitative propensity. We may form a near 
guess whether a person is in the custom of drinking wine, or tea, 
or coffee, or smoking tobacco, from knowing the habits of his 
associates. 

4. Their consumption is also greatly regulated by the passion 
of vanity. This is especially the case, as 1 have already re- 
marked, in vinous liquors. These liquors derive their narcotic 
properties from containing a portion of the fluid termed alcohol. 
In addition to its power over the nervous system, this substance 
has that of preventing, or retarding, the changes that naturally 
go on in vegetable juices. Liquors, therefore, impregnated with 
it, long retain their peculiar flavor and other properties, and may 
thus be consumed in times and at places remote from those in 
which they were produced. This serves to render them matters 
on which vanity can easily lay hold and convert into luxuries. 
Besides serving as marks to this passion, the vegetable juices 
and salts contained in these liquors have probably other effects. 
They afford a certain degree of nourishment, and present the 
spirit in a diluted form. Hence a part of their medicinal effects, 
and hence, also, their greater safety as narcotics. The stomach 
gets loaded with them sooner than with diluted alcohol, which 
might be absorbed with less immediate inconvenience to the 
digestive powers, though its permanent effects may be more 
pernicious. In this respect there is a real cause for the prefer- 
ence given them, although, in this view also, beer is the best, 
because the safest of all liquors. 

The fermented liquors, produced from the juice of the grape, 
are most esteemed in Europe. It is, however, at least problem- 
atical whether they have, or have not, any great, or indeed any 
real superiority. Their chemical analysis does not show much 
grounds for the preference, and we would not, a priori, conceive 
that the substances, which by the art of the chemist may be made 
into a compound not to be distinguished from them, would pro- 
duce a liquid peculiarly beneficial to the constitution, or agreea- 
ble to the palate.* If we inquire into the tastes of other nations, 

* Many thousand pipes of spoiled cider are annually brought to London 
from the country, for the purpose of being converted into port wine. One, 
probably, of the least noxious of the methods of producing the change, is to 
add to the cider beet root juice, alcohol, logwood, and Rhatany root. The 
interior of the cask is then crusted with supertartrite of potash, colored with 


OF THE NATURE OF STOCK. 


295 


,we find, by tbe testimony of travellers, that over the greater part 
of the world, they are rather disrelished. Captain Basil Hall, in 
his voyage to Loo Choo, says he has found cherry brandy the 
most generally esteemed liquor among all nations, and we may 
see a reason for the preference given to such a beverage. The 
sensation, with which even diluted alcohol at first affects the 
organs of taste, is unpleasant. Most people take some plan to 
subdue or correct its harshness. The mixture of matters them- 
selves pleasant in flavor or taste, as in that sort of cordial, one 
would suppose the most effectual and agreeable means of doing so. 
The Chinese have grapes, but make no use of them for the forma- 
tion of fermented liquors. Our European travellers tax them in 
consequence with want of taste and ingenuity. They, in turn, 
are surprised at our folly in manufacturing what seems to them a 
more harsh, and unpleasant, and is generally a far more expensive 
beverage than theirs. Which has most reason on his side, the 
European or the Chinese, is difficult to determine ; for, when the 
passion of vanity joins with the imitative propensity, the two have 
a singular power in producing obstinately opposing opinions, 
especially when they have an organ to work on so pliant in the 
reception of impressions as the palate. The fashionable drink of 
the Prussians of old was fermented mare’s milk ; while the nobles 
drank this, the common people were content with mead. This, 
at least, can be said in favor of the choice, that the latter liquor 
must have been easily got in the country of wild honey, and 
would therefore be vulgar; the former could only be procured by 
the wealthy, and would therefore indicate rank. 

On the whole, as it must be allowed that vanity has a very 
great influence in determining the preference which is given to 
one sort of alcoholic liquor over another, so it is very difficult to 
determine the point where its operation ceases. This, perhaps, 
can only be done in cases where the degree in which some 
agreeable flavor or relish is possessed is in question, or where 
some positively disagreeable flavor or taste, or injurious quality, 
is communicated in the process of preparation. 

Brazil wood, that the merchant, after bottling off the wine, may impose on 
his customers by taking to pieces the cask, and exhibiting the beautiful dark 
colored and fine crystalline crust, as an indubitable proof of the age of the 
wine ; a practice by no means uncommon, to flatter the vanity of those who 
pride themselves in their acute discrimination of wines. See Accuni on 
Adulterations. 


296 


OF THE NATURE OF STOCK. 


It is also to be observed, with regard to these liquors, that, 
with the exception, perhaps, of the negr6, whose physical consti- 
tution is so different from that of the white that no conclusion can 
be drawn from the one to the other, the propensity to their con- 
sumption is stronger among people living at a distance from the 
equator, than among those who inhabit regions lying near it. 
Were it necessary to assign reasons for a fact generally observed, 
we might find them in the grosser feeding of the inhabitants of 
cold climates, and in their diminished susceptibility to the impres- 
sions of the sexual desires. 

I have discussed the subject of these liquors at a length which 
I fear may appear tedious. Some reasons for having done so 
will show themselves afterwards. There is one that has imme- 
diately to appear. 

A very important question concerning their consumption arises, 
which, it seems to me, has been too hastily determined, and that 
determination rashly acted on, in a manner that has produced 
very injurious effects. As far as we have presently to consider 
the doctrine and practice, they may, in a great measure, be traced 
to the following passage in the Wealth of Nations. 

“ Though individuals may sometimes ruin their fortunes by an 
excessive consumption of fermented liquors, there seems to be no 
risk that a nation should do so. Though in every country there 
are many people who spend upon such liquors more than they 
can afford, there are always many more who spend less. It 
deserves to be remarked, too, that if we consult experience, the 
cheapness of wine seems to be a cause, not of drunkenness, but 
of sobriety. The inhabitants of the wine countries are, in general, 
the soberest people of Europe ; witness the Spaniards, the Italians, 
and the inhabitants of the southern provinces of France. People 
are seldom guilty of excess in what is their daily fare. Nobody 
affects the character of liberality and good fellowship by being 
profuse of a liquor which is as cheap as small beer. On the 
contrary, in the countries which, either from excessive heat or 
cold, produce no grapes, and where wine consequently is dear 
and a rarity, drunkenness is a common vice, as among the north- 
ern nations, and all those who live between the tropics, the 
negroes, for example, on the coast of Guinea. When a French 
regiment comes from some of the northern provinces of France, 
where wine is somewhat dear, to be quartered in the southern, 


OF THE NATURE OF STOCK. 


297 


where it is very cheap, the soldiers, I have frequently heard it 
observed, are at first debauched by the cheapness and novelty of 
good wine ; but after a few months’ residence, the greater part 
of them become as sober as the rest of the inhabitants. Were 
the duties upon foreign wines, and the excises upon malt, beer, 
and ale, to be taken away all at once, it might, in the same man- 
ner, occasion in Great Britain a pretty general and temporary 
drunkenness among the middling and inferior ranks of people, 
which would probably be soon followed by a permanent and 
almost universal sobriety. At present drunkenness is by no 
means the vice of people of fashion, or of those who can easily 
afford the most expensive liquors. A gentleman drunk with ale 
has scarce ever been seen among us.” * 

The general question that may here be said to be proposed is, 
whether, or not, in any particular country, the cheapness or the 
dearness of intoxicating liquors will most excite to their intemperate 
use ? 

The excessive cheapness of any of these liquors renders it 
incapable of affording any gratification to vanity, and an equal 
cheapness in them all would universally produce the same effect. 
That passion would, therefore, in such a case have to turn itself 
to other objects, and these liquors ceasing to be luxuries, one 
main cause of their consumption would be done away with. To 
excite to their abuse, there would remain only the pleasure arising 
from their intoxicating qualities, joined to the facility with which 
it might be indulged. Whether, or not, the ease with which this 
propensity might be gratified would lead to long enduring excess, 
or the vulgarity of the enjoyment to speedy and general temper- 
ance, would probably depend on various circumstances. — On the 
climate, whether near the equator, or at a distance from it. — On 
the sort of liquor, whether purely alcoholic or mixed with much 
of foreign matter. — On the strength of the effective desire of 
accumulation, for that desire, when strong, leads to a restricted 
consumption of things of which the immediate benefit is problem- 
atical, and the dangers to futurity, from excess in them, very 
great. If, then, the principle is naturally weak, or at the moment 
its action be clogged by the stock of instruments in the society 
being wrought fully up to the orders correspondent to it, or having 


Wealth of Nations, B. IV. c. III. 

38 


298 


OF THE NATURE OF STOCK. 


passed these, then there will be a great probability of injurious 
and long continued national excesses. 

Unless, then, we have the means of knowing perfectly the 
condition in which all these circumstances, and perhaps some 
others, exist in any society, it is impossible to ascertain, with any 
precision, what may be the effect of reducing very greatly the 
price of alcoholic liquors. The national drunkenness that Adam 
Smith speaks of may be short or long, or, for ought that we can 
say, perpetual. Over the greater part of the United States of 
America whiskey has long sold at about a shilling sterling per 
gallon, so that one day’s wages of a common laborer will pur- 
chase a dozen bottles of that spirit. It is therefore put out of 
the class of luxuries as completely as any intoxicating liquor can 
well be. The consumption of it has, notwithstanding, been very 
great, and in few countries have instances of injurious excess been 
more frequent. It is true that the evil, now exposed to view 
stripped of every disguise, is seen in all its hideousness, and is in 
a fair way of being corrected. After having endured for more 
than one generation, what Adam Smith terms the period of 
general drunkenness, is probably passing away. If the cure be 
thus effected, it may fairly be reckoned radical. Is it in all cases 
advisable to go through a similar course, even with the probability 
of a similar result ? — to induce a season of national drunkenness, 
even with the prospect of the public feeling being effectually 
roused to put down the vice for ever ? To me it seems, that 
the remedy is so violent, that in many cases there might be a 
risk of the patient’s sinking under its operation. A general 
drunkenness among the middle and inferior classes, however 
temporary, is a thing surely not to be lightly discussed in any 
speculations that lead to practice. Compared with it, the tem- 
porary subjugation of a country by a foreign enemy would, in its 
immediate effects, be a small practical evil. If an experiment fit 
to be tried, it should certainly only be so under the most favor- 
able circumstances ; to peril it when the vital powers are in an 
enfeebled condition, would be the height of rashness. 

The analogy which Adam Smith, in the passage quoted, draws 
between the French soldier transported from a part of France 
where wine is scarce, to another where it abounds, and a nation 
suddenly overflowed with an abundance of these liquors, will 
not hold; for, the imitative propensity, in the one case, tends as 


OF THE NATURE OF STOCK. 


299 


powerfully to check, as in the other it operates to excite to the 
abuse in question. If a man be brought among sober people, he 
has every chance to remain, or to become sober ; if, on the con- 
trary, he get among drunkards, it requires all his resolution to 
avoid becoming one. A nation having a taste for these pleasures, 
and suddenly obtaining the means of indulging in them, may be 
compared to a company inclined to be jovial assembled round an 
abundant table, where each excites the other to excess ; a band 
of soldiers living and mixing with the inhabitants of a country 
where, even though cheap, these liquors are temperately con- 
sumed, to an individual partaking of his solitary bottle in the 
midst of those who despise the pleasure, and view him with 
contempt for indulging in it. 

It is, however, particularly to be remarked, that the author 
refers to fermented, not to purely alcoholic liquors, and the 
former are certainly much less apt to lead to excess, than the 
latter. I apprehend, however, that his reasonings in the preced- 
ing, and one or two other passages, have been generally received 
as applicable to both. 

To return to the subject of narcotics in general, all excess in 
their consumption, whether it be regarded as an application of 
labor to an useless purpose, or to one partially hurtful; whether 
it proceed from vanity or pernicious habits, may not improperly 
be termed dissipation, as the articles so consumed may be termed 
luxuries. It is not necessary that we should pretend to deter- 
mine what this loss may in any case amount to ; it is sufficient to 
mark its existence, as a quantity to be taken into account in a 
consideration of the causes, influencing the increase or decrease 
of the national stock. 


CHAPTER XII. 


OF EXCHANGES BETWEEN DIFFERENT COMMUNITIES. 

There are then, it would appear from the preceding chapters, 
two great classes into which commodities may be divided, luxu- 
ries, and articles of consumption which are not luxuries, but, 
were the term permitted, might be named utilities . When the 
events in which instruments issue are of the latter class, then 
instruments may properly be said to be exhausted, when of the 
former they are on the contrary dissipated. 

Having ascertained the circumstances limiting these two divi- 
sions, we are able to enter on the investigation of some phenom- 
ena, relating to the exchange of commodities, which we have 
not hitherto particularly noticed. As yet we have only attended 
to the laws finally regulating the exchange of commodities be- 
tween individuals of the same society, but it is necessary that we 
should also ascertain the general conditions existing in those ex- 
changes which take place between different societies. 

In our view of the subject, every society considered apart, is 
a system within which all circumstances are common and similar, 
and all societies compared together, are systems in which all or 
many circumstances are proper to each and dissimilar to others. 
The wages of labor, orders of instruments, and profits of stock, 
in one society, for instance, are the same, in different, are or may 
be different. When two persons in the same society exchange 
commodities, we have seen that the exchanges they make are 
for equal quantities of labor, reckoned according to the time when 
applied, and the actual orders of instruments. This happens 
because one man’s personal labor, or the command of other men’s 
labor which he may possess, is equal to another man’s personal 
labor, or the command of other men’s labor which he may pos- 


OF THE NATURE OF STOCK. 


301 


sess. In separate societies, however, this law obviously no 
longer holds. An individual in one society, exchanging with 
another, in another society, cannot pretend to regulate the amount 
he is to receive in return by the power which he possesses, if he 
conceives too much demanded, of turning his own funds to the 
formation of that which he desires, for he has no such power. 
To form the commodities he in this case desires, it is necessary 
he should become a member of the society in which they are 
formed, and give up the place he holds in the community of 
which he now makes one. If the manufacturers of cloth in Eng- 
land find that the farmers do not give them, in the form of wheat, 
the same quantity of labor that they in exchange give them in 
cloth, they will turn their capital to agriculture, and so reduce 
the price demanded; but should they find that the American 
farmer puts less labor to the formation of the wheat he exchanges 
for their cloth, than that cloth costs them, they have not the same 
means of lowering his price. 

As the exchanges, therefore, that take place between the 
members of different societies, cannot be regulated by the amount 
of labor embodied in the commodities fabricated by each, there 
would seem to remain, as the foundation of the principles of such 
exchanges, only the qualities of the articles exchanged. If the 
manufacturers in England, find that including the expense of 
transport, they can have wheat as cheap from the American farm- 
ers as from the British, they will be inclined to exchange, and 
if the American farmers find that, including also the expense of 
transport, they can have English cloth as cheap as American, 
they will be inclined to exchange. It is evident too, that the 
British manufacturer will be more inclined to exchange, if the 
American wheat come cheaper than the British, and the American 
farmer, if the British cloth come cheaper than the American. 

The commodities to be exchanged between any two societies, 
may either minister to use, or to luxury, or partly to both. The 
subject will present itself in the most simple form, by discussing 
separately the divisions of it thus indicated. 

First, then, we have to consider the principles and effects of 
the exchanges of commodities which are in no degree luxuries. 

If the members of one society, having before had no inter- 
course with some other society, become aware that in it there is 
a commodity of this sort, of which they would desire to have a 


302 


OF THE NATURE OF STOCK. 


supply, the question to be determined is, will they procure that 
supply, and if so, what will be the effect thence resulting. As 
they have hitherto done without the commodity, they must 
already possess some substitute for it. They will then only seek 
to procure it, if they can procure it for less labor than the substi- 
tute they already possess ; and if they can procure it for less labor 
they will naturally be excited to do so. Were coal, for instance, 
the commodity which the members of one society A possess, and of 
which the members of another society B wish to procure a sup- 
ply, there must in B be some means in existence, of more or less 
fully and easily satisfying the wants which that mineral can sup- 
ply. It may be, for instance, that wood is the fuel there con- 
sumed. Let us suppose that three cords of the wood commonly 
burnt, are equivalent, in the heat given out by them, to one 
chaldron of coals ; if, then, in the society B there be any com- 
modity there equivalent to less than three cords wood, and which, 
transported to A, will in A be equivalent, considered as an 
utility, to one chaldron coals, the exchange will be possible, for 
this difference may pay, or may do more than pay, for the 
expense of transport. If, for example, in the society A timber for 
architectural purposes be more scarce than in B, it might happen 
that the wood used for fuel in B, when transported to A in logs, 
would be in estimation there. It might be that in A, owing to the 
general application of the soil to agricultural purposes, and the 
scarcity of forest, a quantity of timber, fit for the use of the 
builder, such as might be got out of a cord of the fire wood used 
in B, might exchange for one chaldron coals. Were, then, an 
individual of the society B, to transport to A a quantity of square 
timber equivalent in B to three hundred cords of wood, he might 
exchange it there for three hundred chaldrons coals, and might 
so return to B with a commodity there equivalent to nine hun- 
dred cords of fire wood, thrice the amount which he had trans- 
ported from thence. Suppose that the expense of the transport 
of both commodities is equal to three hundred cords, then he will 
just have doubled the stock embarked in the enterprise. Were 
this the state of things, timber, instead of being consumed in fuel 
in B, would be transferred to A, and would return, in the form 
of coals, an equivalent, after paying the charges of transport, to 
double the labor expended in its formation. But in this state of 
things the whole advantage would fall to the society B ; fuel 


OF THE NATURE OF STOCK. 


303 


would be more easily obtained there, but timber would not be 
more easily obtained in A. As, however, it would be equally in 
the power of the members of the latter society to send their coals 
to B, and there exchange them for wood, were other circum- 
stances wanting, this alone would have the effect of equalizing the 
advantages, and in most cases, therefore, they would come to be 
nearly equally divided between two societies so situated. The 
first effects, therefore, would be that the same quantity of fuel 
which before cost in B three days’ labor might now be obtained 
for two ; and that the quantity of building timber that in A cost 
three days’ labor, might also be obtained for two. The revolu- 
tion effected might nearly compare to an improvement in both 
societies, by which, in the one, two cords fire wood might give 
equal heat to what three had done, and, in the other, two logs of 
timber might serve the same purposes as three. Like other 
improvements, they would not be confined in their opera- 
tion to the particular branches of industry in which they had 
place, but would be diffused equally over both societies, carrying 
the whole instruments in each towards the more quickly return- 
ing orders. Profits would rise equally in all employments. The 
absolute capital of both communities would be increased in pro- 
portion to the augmented provision made for their future wants. 
This provision, indeed, would be so far uncertain, that it might 
be rendered inaccessible by war, or other causes interrupting the 
commerce between the two countries ; and the whole industry 
and instruments engaged in it might, therefore, be compared to 
a stock engaged in some hazardous branch of industry, and run- 
ning a chance of being wholly or partially lost, by the action of 
uncontrollably destructive causes. Abstracting, however, the 
chances to which they might thus be exposed, they would em- 
body as real a provision for futurity as any other part of the stock 
of either society. 

In all exchanges taking place between different societies, in 
commodities which are not luxuries, similar principles regulating 
them, and similar effects flowing from them, may be traced. 
For, if they derive their value not from the gratification they 
afford to vanity, but from their capacity to supply real wants, 
they may be compared with other instruments belonging to the 
society, satisfying more or less perfectly the same class of wants. 
And when, through the exchange of other commodities for them, 


304 


OF THE NATURE OF STOCK. 


they can be obtained for less labor than such instruments, will 
naturally come to be so obtained, and completely or partially 
fill the place of them. As coals will compare with cord wood, 
so indian rubber will compare with leather, New Zealand weed 
with hempen cordage, slates with thatch, copper with iron. In 
these cases, and in others where probably mere utility is sought 
for, there are means of comparing one thing with another, and 
the substituton of the one for the other, when in proportion to the 
labor necessary to obtain it, it will more effectually supply future 
wants, is always a real improvement. 

It will often happen that the process will engage in it more 
than two societies. Thus, the society B might exchange wood 
with C, C might exchange iron with A, and A, coal with B. 
Similar principles would still, however, guide its progress, and 
similar effects result from it. While the exchanges were con- 
fined to commodities in no degree luxuries, an increased pro- 
vision for future w r ants would result from them, and a general 
augmentation of the absolute capital of the societies receiving 
these new supplies, and quickening in them of the accumulative 
principle would be experienced. They would in them all have 
the general effect of improvements, and would operate, in the case 
supposed last, in the same manner as would in B some discovery 
facilitating the transport of wood, in C some discovery facilitating 
the smelting iron, in A some discovery facilitating the mining for 
coal. The fewer obstructions, therefore, that stood in the way 
of such transfers, the farther, in these cases, would the stock of 
instruments in those societies be carried towards the order A, as 
any obstruction that might occur would, on the contrary, have 
the effect of checking the progress towards the more quickly 
returning orders, and keeping them nearer the order Z. 

The benefits to all parties, arising from such an interchange of 
commodities as we have described, would be liable to be inter- 
rupted by war or by legislative enactments. These disturbing 
causes we have afterwards shortly to advert to, but there is one 
arising from the progress of invention that may be properly 
noticed here. 

As there are no limits to the inventive faculty, so no commu- 
nity can assure itself that any commodity which it now produces 
and exports to some other community, may not come to be pro- 
duced in that community, and so be no longer exported there. 


OF THE NATURE OF STOCK. 305 

It may be, for instance, that, to return to the supposed case we 
were just considering, in the society B, strata of coal are discov- 
ered so near the surface as to be as easily wrought as in A, and 
that the spirit of enterprise may there be sufficiently active, 
successfully to engage in the occupation of mining for them. In 
that case coals would there be procured for about five-sixths of 
the labor they had cost when brought from A. They would fall 
in relative value, the absolute capital of the society would be 
augmented, and profits proportionally increased. But while in the 
society B, the effects of the progress of invention would be thus 
beneficial, in A they might operate prejudicially. No exportation 
of coals could now take place from A to B, for being necessarily 
very nearly at the same price in the one as in the other society, 
there would be nothing to pay the expense of transport. Iron 
then could no longer be paid for in coals, unless that commodity 
sold at a lower rate. To pay for it, coals must be sold at B for 
less, or some other commodity must be resorted to. In the 
former case the society A would sustain a sensible loss, compara- 
ble to an increased difficulty in working its mines, and propor- 
tional diminution of the amount of its absolute capital. In the 
latter, though the loss might be less, it would nevertheless be 
real ; for, by the supposition, coal was the only commodity ex- 
ported, and it could only be so because it was the one bringing 
the best return. The necessity therefore of turning to some 
other article, implies the obtaining of a less return, and a conse- 
quent diminution of the absolute capital of the society, and, 
unless counterbalanced by the progress of improvement, or an 
increase in the strength of the effective desire of accumulation, 
a withdrawal from the reach of the accumulative principle of its 
members, of some portion of materials before within its grasp. 

2d. When again, luxuries, the produce of foreign art, present 
themselves to a society, whence they had before been strangers, 
their value cannot be ascertained by comparing them with com- 
modities of domestic formation, for it is not the relative useful 
qualities of commodities, that fit them more or less perfectly to 
gratify the passion of vanity, but solely the difficulty of procuring 
them. Were a quantity of the article used for hemp in New 
Zealand, shown to a person in England, who had never before 
seen it, and was totally ignorant of its price, on being made 
accurately acquainted with its strength, durability, weight, ab- 
39 


306 


OF THE NATURE OF STOCK 


sorbing qualities, and pliancy, as compared with real hemp, he 
would be able, knowing the value of the latter, to state pretty 
nearly what it actually sold for. But were a person, in the same 
country, perfectly ignorant of the value of pearls, and never 
having seen any, to be shown a string of them, and made ac- 
quainted with their qualities in relation to artificial pearls, and 
glass beads of various sorts, though knowing well the price of the 
latter, he would certainly be unable to assign the sum to be got 
for the former. Were a variety of alcoholic liquors to be pre- 
sented to an individual quite ignorant of them, and of their value, 
and were he, changing from one to another, to partake, occasion- 
ally, freely of them all for months and years together, were all 
other circumstances concerning them but their sensible qualities 
and effects concealed from him, he would certainly be unable to 
fix their relative value. Were, in like manner, specimens of all 
the different fabrics used for female attire for the last ten years, 
with their relative durabilities ticketed on them, presented to a 
person of good taste, but perfectly ignorant of these matters, he 
would certainly also be quite incapable of coming near their 
actual relative cost. The same observation will apply to all 
other luxuries. As they compare with each other, not by their 
inherent qualities, but by the difficulty in procuring them, unless 
the comparative labor necessary to procure them be known, there 
is no means of fixing their relative price. It affords a rule too 
by which we may test what are, or are not, luxuries. Thus, I 
apprehend, that were a silver spoon, or sauce-pan, or vase, shown, 
for the first time, to any person in the middle ranks of life, though 
ignorant of its value, yet seeing its beauty and susceptibility of 
receiving the most delicate impressions of the workman, and 
being informed of its durability, safety, and the saving of labor 
attending its use, on a fair estimate of these qualities, he would 
place it not very far below its present relative value to copper. 
He might, it seems to me, considering merely the qualities inhe- 
rent in it, be willing to give for it twenty or thirty times what he 
would for the same article wrought in copper. He would, how- 
ever, I should apprehend, be far from estimating similar articles 
fabricated of gold, at sixteen times the price of the same in silver. 
Supposing him possessed of real taste and accurate judgment, the 
difference between his estimate, and the actual comparative value 
of these metals would maik how far they were, or were not 
luxuries, to people of his fortune. 


OF THE NATURE OF STOCK. 


307 


The only rule, then, which people desirous of possessing luxu- 
ries can adopt for measuring what they will give for them, is the 
degree of difficulty of procuring them, the amount of labor which 
must be given for them. When they are satisfied that any par- 
ticular article of the sort they are in quest of is used by other 
people, and that it cannot be had for less, they will pay the price 
demanded. They do not seek for the grounds of their deter- 
mination in the utility of the commodity, but in its scarcity. Let 
a farmer go to lay out three pounds on lace for his wife, if he is 
assured that the dealer in that article to whom he applies will 
not charge him more than others, and that Mr. A’s wife and Mr. 
B’s wife wear the same sort, he will care little whether he gets 
for his money six or twelve yards, or whether it be two or three 
inches broad. All that he is concerned about is that he should 
get as much as other people. Let the same farmer think of 
purchasing some new manure for his land, he will conceive 
it necessary to ascertain both the effects of the article upon the 
soil he farms, in comparison with other manures, and its cost also 
compared with them. If he find that, compared with them, the 
cost is no greater, he will be inclined to purchase; if he find it 
less, he will conceive it so much gain ; while it lasts it will be 
equivalent to a marie pit discovered on his own farm. 

If a dealer imports a commodity having a shade of distinction 
scarcely perceptible considered in relation to the degree of enjoy- 
ment it gives, but sufficiently marked to distinguish it from other 
commodities of the sort, and if half a dozen people of rank adopt 
the use of the article as a sign of their superiority, it has all 
chances to enter into the consumption of every individual in the 
community who can afford it. In such cases, the price of the 
commodity depends altogether on the venders of it. But, as 
each of these wishes to sell as much as possible, and as he 
can do so most readily by underselling his neighbors, the price 
gradually falls under a free competition, until the dealers in it 
receive only the profits that the effective desire of accumulation, 
and the progress of improvement in the society measures out to 
' them. At the end of the process the whole difference observa- 
ble, if the article be completely a luxury, is a change of fashion. 
The principle of accumulation has not been led to grasp a greater 
compass of materials, nor has any addition been made to the 
general stock of the society, a new set of marks of distinction has 


308 


OF THE NATURE OF STOCK. 


merely been introduced. The property in circulation is not aug- 
mented, but the coin has received a new impression, or got 
increased weight. It may, however, happen, and very often 
does happen, that, during the process, a sort of factitious improve- 
ment is introduced, which, while it lasts, is sometimes nearly 
equivalent to a real improvement. 

Suppose a merchant, seeking to strike out a new branch of 
trade, exports to somp distant country, and sells there to advan- 
tage, an article of luxury the produce of the community to which 
he belongs, and in return receives for it a commodity, a simple 
utility in demand among his countrymen. Let the former com- 
modity be lace, and the country to which it is exported E, and 
the latter commodity barilla, and country to which it is imported 

D. In process of time the trade increases, until a large quantity 
of lace is exported, and a large quantity of barilla imported. 
Suppose, farther, that the steady demand for the lace, joined to 
other circumstances, animates ingenuity to facilitate the process 
of manufacture, and that the article is before long produced at 
half the outlay it cost when first exported. In the ordinary 
course of matters, the diminished cost of production should be 
followed by a correspondent reduction in the price it is sold at in 

E. Two circumstances, however, may prevent this. The 
intercourse between D and E may be very difficult, and clogged 
by many obstructions, and the community E may be very 
numerous, and may easily absorb a large amount of the article. 
Both circumstances would help to diminish the effects of compe- 
tition ; the former by lessening the number of competitors, the 
latter by preventing the actual competition induced from operat- 
ing fully. It might in consequence happen, that lace, though 
produced with double facility, sold in E at nearly the same price 
as at first. If we suppose that commodity to be a pure luxury, 
this would be no disadvantage to E, for the quantity used w^ould 
serve exactly the same purpose as if its amount had been doubled ; 
while, on the other hand, it would be so far an advantage to D, 
that it would place somewhere there the command of all the 
labor which in E was actually paid for. Among the members 
of the society D double the quantity of barilla would be somehow' 
or another shared, that the labor expended in procuring it w r as 
entitled to. The advantage would not certainly, of necessity, 
have that healthy and vivifying effect which real improvement 


OF THE NATURE OF STOCK. 


309 


occasions, for it might not spread through the whole community, 
but might be dissipated in luxuries by the merchants, manufac- 
turers, and artisans engaged in acquiring it. If, however, in other 
branches of trade and of manufactures for exportation, similar 
facilities were introduced, and similar large returns obtained, and 
if in all the departments of domestic industry great real improve- 
ments take place, the advance of the whole society would be 
uniform, and not much unlike what would flow from an univer- 
sally real improvement. 

Should two societies in the same way trade together in mere 
luxuries, a sort of factitious improvement might be created by the 
effects of a restricted competition. The merchants who engaged 
in the trade would, in the first place, acquire all the labor saved 
by the overcharge of the commodities they bought and sold, and 
the benefits might be diffused more or less generally on both 
societies. 

When, by the removal of restrictions, and the increased 
capacity of industry to fabricate the goods in request as luxuries, 
a free competition is induced, all these factitious advantages dis- 
appear. Each adventurer endeavoring to beat down his opponent 
in the foreign market, the productions of the industry of remote 
countries come to be offered there, for the lowest amount, at which 
the strength of the principle of accumulation can permanently 
continue to produce them. They may even pass much below 
this ; for vanity, capricious in its tastes, soon begins to despise 
altogether what may be every one’s purchase, and leaves what it 
once highly prized as now vulgar and unworthy regard. In the 
supposed case of the exportation of lace, that commodity might 
have triple the labor expended on it, and its quantity might be 
increased sixfold, and yet might bring in a smaller return than it 
did before. The ample revenues which the merchant, the man- 
ufacturer, the artisan, derived from the fabrication of such articles 
become reduced to the lowest amount that may suffice to move 
their respective productive faculties. Other branches of manu- 
facture share the same fate ; the whole machinery of industry is 
clogged and encumbered by the heavy additional burden thrown 
on it, and distress and discouragement pervade the community. 

3d. There are, however, very few, if any, commodities which 
are purely luxuries. Although vanity is in part the cause of the 
estimation in which very many are held, and though it gives to 


310 


OF THE NATURE OF STOCK. 


some perhaps nearly their whole value, nevertheless it seldom 
exists in any alone. It almost always applies itself, as I have 
already observed, to something ministering in some degree to 
real wants or pleasures. There is beneath almost every luxury 
a substratum of utility of greater or less depth. 

The effects, consequently resulting from the exchange between 
different communities, of very many commodities, are compounded 
of the results produced by the traffic in articles of utility and of 
luxury. As it is impossible in almost any case to determine 
accurately how far any article is or is not a luxury, there is pro- 
portional difficulty in ascertaining what are the precise effects 
resulting from the exchanges actually carried on between any 
two communities. There is one principle which may, in some 
instances, help to guide us. Almost all articles of which the 
consumption is conspicuous, the precise effects resulting from 
their physical qualities difficult to ascertain, and which, from their 
novelty, have not yet been subjected to the effects of a free com- 
petition, may be presumed to be in a great degree luxuries. In 
them, we may be sure, vanity has found a material on which she 
could easily fix, and from which there has been no opportunity 
of dislodging her. 

The relative effects of restriction, and free competition, when 
opportunities have presented themselves of observing them, enable 
us, however, with some certainty to determine, how far the com- 
modities subjected to their operation have been luxuries, or real 
utilities. In regard to articles supplying real wants, the more easy 
and unconstrained the communication, the more extended the 
production, the freer the competition, the farther, as we have 
seen, are the stocks of instruments of the societies exchanging 
carried towards the more quickly returning orders. Every step 
in advance in the course is equivalent, subject only to the risk of 
the communication being interrupted, to a real improvement. 
With regard to such commodities, any general evil resulting from 
overproduction is quite impossible. A partial glut, as it is termed, 
may indeed occur ; but this, although a slight partial evil, must 
be a general good. The commodity produced satisfying real 
wants, an increased supply of it must diffuse a general and sensi- 
ble plenty. In regard to such commodities the reasoning of 
Mr. Say is, I conceive, conclusive. A general overproduction is 
an absurdity, for it implies the means of a general consumption, 


OF THE NATURE OF STOCK. 


311 


and would, in fact, be a general improvement. It would be as 
if the materials which nature has given to man were to receive 
powers in addition to those which they already possess, for satis- 
fying his wants ; as if the grain of the fields, the grass of the 
meadow, the trees of the forest, advanced more rapidly to per- 
fection, as if the ore yielded up its metallic treasures with greater 
facility, the sun diffused a more genial warmth, and the earth 
rejoiced in universal and exuberant fertility. The increased pro- 
vision for wants thus presented, must either be consumed, or 
applied to the formation of instruments to supply the demands of 
a more distant futurity. 

But though these are the effects of increased facilities in the ex- 
change of commodities in as far as they are real utilities, it is exactly 
the reverse in so far as they are luxuries. Restriction in the 
exchange of luxuries may be, and often is felt, as no diminution 
of enjoyment, but a great saving of labor, and the removal of that 
restriction may almost immediately oblige all, or many of the 
communities exchanging, to expend the whole amount of labor 
they had before saved. If then we find that increased facility of 
exchange, instead of diffusing plenty, spreads poverty, instead of 
carrying the stocks of the communities exchanging towards the 
more quickly returning orders, places them in those of slower 
return, we may assure ourselves that vanity must have been a 
very potent agent in giving to the commodities exchanged the 
estimation in which they were held. 

Perhaps the most remarkable example that was ever presented, 
of general and long continued restrictions being at once and com- 
pletely removed, is that which occurred in consequence of the gen- 
eral peace succeeding the final defeat of the Emperor Napoleon. 
A power which modern times cannot parallel, had been long ex- 
erted to bind up the commerce of Europe. It had been exerted in 
vain, for that commerce still moved, though it moved in shackles. 
The termination of the war undid them at once. The ships of the 
merchant again securely passed from land to land, and he again, 
without fear, exposed his wares in every market. Had the com- 
modities thus largely exchanged, been altogether utilities, it is 
impossible but that a vast improvement must have been univer- 
sally experienced, an augmentation of the resources of society 
every where felt. The havock and insecurity of war, and the 
waste of stock and labor attending it w 4 ere done away with, and 


312 


OF THE NATURE OF STOCK. 


the whole energy and intelligence of the most powerful and intel- 
lectual race which possibly the world has as yet seen, were turned 
to the arts of peace, and the amelioration of the condition of man. 
Instead, however, of having to mark the progress of abundance, 
prosperity, and happiness, we are rather called on to note the 
prevalence of poverty and distress. It is, I apprehend, impossi- 
ble, to explain the far extended oppression under which capital 
and industry have labored, but by admitting that they have 
applied themselves largely to objects, the direct effects of the 
attainment of which are worse than useless to society. Misery 
it is true is clamorous, happiness is quiet, and therefore the 
amount of the actual distress may sometimes have been made to 
appear greater than the reality, but admitting a large deduction for 
misrepresentation thence arising, there remain too many well 
authenticated facts and statements to doubt, that if freedom of 
intercourse and competition has produced good, it has also pro- 
duced evil, and hence that luxuries have made a large part of the 
commodities in the production of which that competition has ex- 
erted its powers. We may observe too, that countries producers 
of articles which cannot be accounted luxuries, have in fact 
derived great advantages from the facility of intercourse and 
increase of exchanges. Russia seems never to have made so 
rapid advances, as within the last twenty years, while in Great 
Britain protracted misery and distress were never so rife as they 
have been for the greater part of that period. Were European 
nations ranged according to their productions, those two countries 
would probably be at opposite extremities of the scale of industry. 


CHAPTER XIII. 


OF WASTE. 

The causes arising from deficiencies in the moral and intel- 
lectual powers retarding the progress of improvement and accu- 
mulation, and diminishing the stocks of societies, which we have 
hitherto noticed, refer to the matter of which commodities con- 
sist. There are others proceeding apparently from the same 
circumstances, which create difficulties in the exchange and pres- 
ervation of instruments, and may be said to relate to the manner 
in which exchanges are made and instruments preserved. 

Every thing retarding, or interposing difficulties in the exchange 
of instruments, must have the effect of placing them in orders of 
slower return. It must lengthen the period of exhaustion, or 
add to the labor of formation. Instruments may be exchanged, 
as we have seen, either by barter or cash, or, through the inter- 
vention of credit, — a promise to deliver an equivalent at some 
future time. 

In the case of transfers by barter or cash, were the holders of 
instruments so exchanged to represent them exactly for what 
they are, all difficulties would be done away with, not arising 
from the nature of the things themselves. But it is the business 
of every exchanger to buy as cheaply, and sell as dearly, as pos- 
sible, and he very frequently, I might say generally, endeavors 
to do so by representing things to be other than what they are. 
Were any one, for example, desirous of purchasing a horse, 
morally certain that to whatsoever vender of those animals he 
applied, he would tell him, as nearly as he himself knew, the 
qualities of the horses he had on hand, and their just value, any 
purchase of this sort he might have to make would be made 
with facility and at once. The purchaser, however, can seldom 
40 


314 


OF THE NATURE OF STOCK. 


depend on the accuracy of the statements he so receives. He 
is often obliged to take much trouble, and to spend no little time, 
before he makes his bargain, and, notwithstanding, is not unfre- 
quently deceived. The time and money thus expended, both 
by the sellers and purchasers of horses, and other commodities, 
is so much loss to the community, and places the instruments on 
which they are expended in orders of more slow return. Indirectly, 
too, they may occasion more serious losses. If a farmer be deceived 
in the purchase of a horse, it may very injuriously retard his 
operations at the moment when it is most necessary for him to 
advance them. If a builder be deceived in the timber he pur- 
chases, it may occasion the speedy decay of the whole fabric he 
erects. 

The amount of loss arising, both directly and indirectly, from 
successful or unsuccessful attempts to pass off commodities for 
what they are not, is, I apprehend, determined by the weakness 
of the social and benevolent affections and intellectual powers. 
Where there is the most lively sympathy with the distresses and 
losses of others, one will be most restrained from being the cause 
of loss to another, both from the promptings of his own feelings, 
and from a consideration of the sentiments with which others will 
regard him. Where the tendency and consequences of actions 
are most clearly seen, one will be most cautious of doing any 
thing, which, by weakening general confidence and security, may 
prejudicially affect the interests of society. Such losses will 
therefore be least frequent where the accumulative principle 
is strongest, and most frequent where it is weakest. 

In China every man who sells tells as many lies as he thinks 
have any chance of passing. He is never ashamed at being 
detected. When that happens, he merely compliments the 
person discovering the intended deception on his sagacity. 
Among the ancients, both Greeks and Romans, all sorts of 
trickery and artifice in purchasers and sellers seem to have been 
common. Plato makes Socrates say that, in traffic and com- 
merce, there is no such thing as an honest man, and Cicero has 
a remark very similar. These, and the like assertions of clas- 
sical authors, have indeed, now-a-days, been put down as mere 
prejudice, but, though we are doubtless a very acute and saga- 
cious generation, I can scarce think but that Socrates and Cicero 
knew their own countrymen better than we can do. Mercantile 


OF THE NATURE OF STOCK. 


315 


honor and fair dealing are modern terms. Without much of the 
reality of what they import, the extensive transactions now carried 
on between individuals and communities could not exist. Never- 
theless, the things to which they are applied want often not a 
little of being fitly so described, and the deficiency in all com- 
munities occasions a large portion of the outlay necessary to the 
formation of instruments. 

Deceit, however, it is to be observed, when exercised in the 
exchange of mere luxuries, occasions an immediate gain, instead 
of loss, to communities. When there was a prohibition on French 
silks imported into Britain, they were particularly fashionable, 
their great expense rendered them a fit material for vanity. The 
British manufacturer could make fabrics not to be distinguished 
from them, but whickof course as British goods would not sell. 
They were, however, readily vended as smuggled French goods 
by individuals hired to hawk them about under that guise. The 
deceit was certainly an immediate loss to no one, a consid- 
erable gain to the manufacturer.* The ulterior effects of all 
deceit, however, in weakening the moral principle, must ever be 
injurious to communities. 

In exchanges effected by the intervention of credit the neces- 
sity of perfect fair dealing is more apparent, and the losses occa- 
sioned by fraud and deceit still greater. The persons giving the 
credit must generally depend for repayment on the good faith of 
the persons receiving it. The extent consequently to which 
these transactions can in any community be carried, must be 
measured by the general probity of its members. Where people 
are inclined to make promises which they have reason to fear 
they may not be able to fulfil, or which they know they cannot 
fulfil, the system of credit is confined or destroyed. 

The prevalence of a spirit of integrity in credit transactions, 
would seem to proceed from similar principles to those, on which 
good faith and honesty in all transactions depend. 

The exchange of instruments between communities is ob- 
structed by restrictions, prohibitions, or war. To the effects of 
these we have already partially adverted. They operate differ- 
ently, as the commodities are utilities, or luxuries. 

1. An interruption of the exchange of utilities between com- 


Hansard’s Debates, March 8th, 1824. 


316 


OF THE NATURE OF STOCK. 


munities checks accumulation, by taking from it the materials on 
which it exerts itself ; it excites the inventive faculty, by prompt- 
ing it to discover fresh materials, and new means of forming them 
into instruments. According, therefore, to the circumstances' of 
the community, and the nature of the materials within reach of 
its members, it may either come to be a good or an evil. 

Were the intercourse between two communities, of which the 
one A exchanges coal for the wool of the other B, suddenly to 
cease, the event might be felt as a very great evil, and, at first, 
the substitutes for these materials requiring more labor to work 
them up into instruments of the sort required, the whole stock 
of instruments possessed by both societies might be carried on 
in the series some distance towards the more slowly returning 
orders. It might happen, however, that in the society B import- 
ing coal, there were beds of coal as easy to work as in A, and 
that in the other A importing wool, there were tracts of land as 
capable of feeding sheep as those employed for that purpose in 
B. In this case, it is probable that invention would apply to 
such materials, and that, in time, coal would be obtained in B, 
at as cheap a rate as in A, and wool in A at as cheap a rate as 
in B. Were it so, by the saving of labor and of time in the 
transport of the commodities from country to country, the stocks 
of instruments in both societies would be placed in orders of more 
quick return than they were at the commencement of the inter- 
ruption. Whether the loss on the one hand, or the saving on 
the other, might, in the circumstances of either society, be fitly 
esteemed greater, would depend on whether or not there were 
materials in existence that by the power of invention might with 
sufficient ease, and within the requisite time supply the particular 
wants in question. There might not be fit materials, or the time 
requisite to work them up might be too long. 

Before the cession of Norway to Sweden, it was reckoned to 
produce grain or vegetables for its inhabitants sufficient only for 
foui or five months. Its supplies for the rest of the year were 
obtained from Denmark, to which country, in return for corn 
received from it, it exported timber. When the great powers 
had resolved on its annexation to Sweden, a British fleet block- 
aded its coast, the peasantry came in starving crowds to the 
towns, and a country from which the bravest race in Europe 
once issued, was compelled to yield without a stroke. The 


OF THE NATURE OF STOCK. 


317 


insult then received, and the hardships endured, had the effect 
of giving a great stimulus to agriculture. The more opulent 
formed themselves into societies for the purpose of improving the 
art, individuals skilled in its operations were engaged in Britain, 
and in a few years a great addition was made to the agricultural 
produce of the country.* The time in this case required for the 
formation of instruments was too great, even supposing there had 
been a sufficiency of materials of which to construct them, and 
had not, therefore, the society submitted, it must have endured 
excessive evils. 

Many instances, however, might be cited, where the interdic- 
tion by war, of the intercourse between different countries, has 
very speedily produced a supply of the commodities interdicted, 
and apparently without great injury to the nation possessing the 
materials necessary for their formation. “ Upon the break- 
ing out of the war with France,” observes Mr. Gee,f “and 
prohibiting French commodities, encouragement was given for 
erecting several of those manufactures here, as the lustring, 
alamode, and other silk manufactures for hoods and scarves which 
the king’s royal consort, the excellent Queen Mary, took no small 
pains to establish ; for which article alone it is allowed F ranee 
drew from us above £400,000 yearly. At the same time the man- 
ufacture of glass was established, which before we used to have 
from France, and also that of hats and paper. In his time also 
the manufactures of copper and brass were set on foot, which are 
brought to great perfection, and now in a great measure supply 
the nation with coppers, kettles, and all other sorts of copper 
and brass ware. The making of sail-cloth was begun and car- 
ried on to great perfection, and also sword blades, scissors, and a 
great many toys made of steel, which formerly we used to have 
from France; in the manufacture of which, it is said, we now 
excel all other nations. The setting up of salt works and im- 
proving of salt springs and rock salt, hath proved very beneficial 
here, and saves a very great treasure yearly, which we heretofore 
paid to France for salt and a great many other things which I 
forbear to enumerate.” 

Restrictions operate quite oppositely on the exchange of luxu- 

* These facts I learned in a tour through that country in 1818. I have no 
means of ascertaining what is now the state of affairs there. 

t Trade and Navigation of Great Britain. Lond. 1738. 


318 


OF THE NATURE OF STOCK. 


ries between communities, from what they do on the exchange 
of utilities. Their first effects are beneficial, while their ulterior 
effects may be injurious. The interdiction of a pure luxury 
occasions, as we have seen, no loss whatever to the whole society. 
It can scarcely fail to produce a gain. If it diminish the whole 
amount of luxuries consumed in the society, that is evidently so 
much saved. If, as is more likely, the force of vanity be not 
weakened, it must at least be directed to other objects, probably 
to some domestic imitation of the foreign article. In such cases 
the successful imitators will demand and obtain prices yielding 
much larger profits, than their capitals would give in any other 
employments. The saving of labor, either in checking vanity, 
or in supplying it with less outlay, is gain to some individuals, 
loss to none. Competition, however, will in time reduce the 
price paid for luxuries, to the lowest amount for which the laborer 
and capitalist will exert their energies. As improvement can 
have no effect on domestic luxuries, and as they must always be 
rated by the real labor bestowed on them, they are ultimately the 
productions of all others least profitable to the society. * 

2. The formation of instruments is rendered difficult and costly 
to individuals, from frauds and violence punishable by law. To 
guard against them always requires some vigilance, and occasions 
some expense, and often demands a good deal of both. The 
loss hence arising may be very considerable. It is said that the 
cloth trade of Verviers, in France, was ruined from the number 
of thefts committed in various stages of the manufacture, occasion- 
ing a loss of about eight per cent, on the quantity produced. 

The infrequency of crime will also, I apprehend, be found 
chiefly to depend on the same principles that give force to the 
effective desire of accumulation, the general strength of the 
social and benevolent affections, and intellectual powers. Where 
a desire of promoting the common good prevails, and there is a 
clear perception of the means of doing so, infringements on the 
rights of individuals, or violence to their persons; will be rare. 
It is the strength of the moral feelings that is the safeguard of 
the laws. Where these are destroyed, or greatly weakened, as 
where a person has been cast out of the brotherhood of society 
by being marked as a criminal, the dread of corporeal pains is 
scarcely ever sufficient to deter from future trespasses. 

The establishment of good laws and the security of the system 


OF THE NATURE OF STOCK. 


319 


of government, by diminishing the temptation to crime, and the 
chance of escape from its consequences, have also, no doubt, great 
effect. But good laws or government can neither be established 
nor maintained without good morals. Where purely selfish feel- 
ings prevail laws have no power. 

“ Quid faciant leges ubi sola pecunia regnat? ” 

The direct destruction and waste occasioned by wars make, also, 
no small item in the account of losses, to which the stocks of all 
communities are subject. 

The loss occasioned by the deceits and frauds of individuals, 
and by the prohibitions and violence of states, may not unfitly be 
termed waste. 


CHAPTER XIV. 


OF THE COMBINED OPERATION OF THE CAUSES INVESTIGATED IN THE 
PRECEDING CHAPTERS. 

The investigations in which we have been engaged in the 
preceding chapters seem to indicate several great causes as 
determining the nature and production of stock. They may be 
divided into three classes. 

I. Regarding things material. 

1. The nature of the material world, producing a series of 
events succeeding each other in regular order. 

2 . The nature of man, as a being in part material, acted on, 
therefore, by matter, and whose existence and pleasures are, 
consequently, dependent on events taking place among material 
objects. 

3. Also the nature of man, as a being in part material, and 
whose corporeal powers — his labor, enable him to change the 
positions of the matters around him. 

II. Regarding things not material. 

1. The intellectual faculties of man, reaching not to an abso- 
lute knowledge of the material world, but to a perception of the 
order in which events succeed each other in it, and to a discovery 
of the means of producing events necessary, or desirable to him, 
by applying his corporeal powers to change the positions of the 
materials within his reach. 

2 . The moral nature of man, — the motives by which he acts, 
determining the degree in which he will be excited to apply 
himself to the discovery of the order in which events succeed 
each other, and to changing the positions of materials, and so 
constructing instruments producing events ministering to future 
necessities or pleasures. 

* Concerning these two causes, the general conclusions at which 


OF THE NATURE OF STOCK. 


321 


we arrived were; that the more the intellectual faculties are 
expanded, the greater the power to extend the knowledge of the 
successions of events, and to form materials into instruments ; 
and that the greater the strength of the moral powers, — the 
social and benevolent affections, the greater the desire to discover 
the order of the succession of events, and to apply such discoveries 
to the formation of materials into instruments. And conversely ; 
that the feebler the intellectual faculties and moral powers, the 
less both the ability to discover, and the inclination to apply dis- 
coveries to the formation of instruments, and the greater the 
tendency to dissipate the capacity of the instruments formed in 
luxury, and to waste it through deceit and violence. 

III. Causes derived partly from the nature of the material 
world, and partly from the nature of man. 

1. Change; arising from revolutions of all sorts, by which 
men and arts are moved from region to region. This places 
man and matter in new positions, and discloses to him new con- 
nexions and relations, in the natures of the bodies within reach of 
his operations. 

2. Servile imitation ; the antagonist of the former, by which 
men are led to operate by rule, and not of knowledge, and the 
progress of invention and improvement retarded. 

Strength of intellect and moral feeling gives continuity of 
existence to the society, and leading the men composing it to 
take an interest in distant events, extends the operations of their 
powers to the intelligence, and application to useful purposes, of 
a wide circle of events. Their weakness, and the prevalence of 
the opposing causes, folly and pure selfishness, isolates each 
member of society, contracts the operations of the powers of the 
whole to the consideration and application of a narrow circle 
of events, and dissipates and wastes them, in efforts made by 
each to raise himself superior to others, and by force or fraud to 
take from them what they possess. 

There are thus two great principles, the inventive, and accu- 
mulative, generating stock and adding to it, and they are both ex- 
cited and moved, and enfeebled and restrained, by similar powers. 

I. The inventive principle. 

Its strength extending the power of man, augments stock, by 
carrying the instruments composing it to orders of quicker return. 
41 


322 


OF THE NATURE OF STOCK. 


It is accompanied by economy, by fidelity to engagements, by a 
diminished inclination to luxury and waste. 

Its weakness, by contracting the power of man, prevents the 
augmentation of stock. It is accompanied by extravagance, by 
infidelity to engagements, by a propensity to luxury and waste. 

II. The accumulative principle. 

Its strength leading men to embrace in their operations a wide 
circle of events, accumulates stock, by giving additional capacity 
to instruments already formed, or by working up new materials. 
It carries instruments to orders of slower return, and is accompa- 
nied also by economy, by fidelity to engagements, by a dimin- 
ished inclination for luxury and waste. 

Its weakness, contracting the compass of events on which 
there is an inclination to operate, diminishes stock, by allowing 
materials to escape from it, and lie idle, which, formed into instru- 
ments, would yield abundant, though distant returns. Under it 
instruments can only exist at the more quickly returning orders. 
It is accompanied, also, by extravagance, by infidelity to engage- 
ments, by a propensity to luxury and waste. 

The consideration of the mode of operation of these two prin- 
ciples suggests the following remark. 

If, in any society, instruments be at orders of speedy return, 
and we have not the means of ascertaining whether or not this 
proceeds from the actual recent progress of invention, we may 
fairly conclude it does so, if, in that society, there be much 
economy, little luxury, good faith in exchanges, fidelity in the 
discharge of promises, credit consequently extensively prevailing, 
and few breaches in the peace, or transgressions of the laws of 
the community. If, on the contrary, there be little economy, 
much luxury, a want of good faith and fidelity, credit narrowed, 
frequent public and private crimes, we may certainly conclude 
that this position of instruments arises from a deficiency in the 
accumulative, not from recent progress of the inventive principle. 

Upon these two principles, the third set of causes referred to 
operate somewhat differently. Change excites the principle of 
invention, but often directly restrains that of accumulation. Imi- 
tation restrains invention, but does not directly retard accumu- 
lation. 

The several causes referred to, rank among the chief agents 
in the production of the phenomena which the progress of society 


OF THE NATURE OF STOCK. 


323 


exhibits. We have considered them separately, but they never 
appear so, always acting in combination. This circumstance 
would not of itself affect any conclusions concerning them, for it 
applies to phenomena of all sorts, the causes influencing every 
one being compound. But the peculiar nature of the human 
mind, rather excited to action by motives, than passively operated 
on by them, and moulding, therefore, its energies to suit the 
course it adopts, occasions a difference between phenomena influ- 
enced by it and all others. Hence, according to the preponder- 
ating motive, and the course of action followed, the same powers 
and principles take opposite directions, and the will is able to 
draw to its purposes and make allies of those which would seem 
naturally opposed to it. 

Thus in an intelligent and moral community, the vanity of the 
mother is gratified in the well-being of the child, and she prides 
herself in the proofs of her having been an affectionate and care- 
ful parent. In a vain and dissipated community, on the other 
hand, she would be ashamed of devoting her attention to the 
homely and unostentatious cares to which a solicitude for the 
welfare of offspring prompts. In the one case vanity excites 
parental affection, in the other it stifles it. The movement of 
the mind, in these instances, is somewhat analogous to that of 
those balances, in which the poise, if in the least inclining to one 
side or the other, hurries it down with a rapid and continually 
increasing preponderance. 

This proneness in humanity to advance or recede with a speed 
accelerated by the subjugation of opposing motives, helps to 
afford an explanation of what I conceive to be one of the main 
causes of the decay of states. 

To add continually to the stock of any community, even some- 
times to maintain it without diminution at its actual amount, is a 
process in the prosecution of which difficulties always oppose. 
While the funds of any society increase, the numbers among 
whom those funds are to be shared also increase. The greater 
annual revenue which invention and accumulation provide, though 
it must support a more numerous population, may not support a 
population having, individually, a greater share of the means of 
comfort or pleasure, than that possessed by the members of the 
society when improvement was yet in its infancy. To carry 
the community still farther onward, even perhaps to maintain it 


324 


OF THE NATURE OF STOCK 


in its place, requires, therefore, generally, that the interests of 
futurity should hold the same relation to those of present time 
in the minds of the members of the society as ever. If, there- 
fore, among any of the divisions of the body politic, futurity weighs 
more lightly when compared with the present than it did before, 
there there will be weakness, an incapacity to advance or even to 
maintain the same position may be experienced, and that which 
is defective drawing to it what is sound, from this point the pro- 
gress from bad to worse may commence. The course of society 
may thus be said to be always against an opposing current, which, 
if it cannot be stemmed, sweeps downward with headlong force. 

u Sic omnia fatis 

In pejus mere, ac retro sublapsa referri. 

Non aliter, quam qui adverso vix flumine lembuin 
Remigiis subegit : si brachia forte remisit, 

Atque ilium in prseceps prono rapit alveus amni.” 

As a foundation for the few observations which our limits per- 
mit me to make on this part of the subject, it is necessary to 
refer to a circumstance, the truth of which was assumed in an 
early part of the discussion. “ The numbers of every society,” 
it was said, “ increase, as what its members are inclined to esteem 
a sufficient subsistence, is provided for them.” * 

The only classes in society which our inquiry has considered, 
are the two of capitalists and laborers. With regard to them we 
might a priori, and abstracting our attention from what we know 
to be the fact, be in doubt which of the following suppositions 
would be correct. 

We might suppose that both classes would reckon that a suf- 
ficient subsistence which had supported themselves, and that the 
numbers of both being equally multiplied, the average revenues 
of the individuals composing both might remain the same ; or we 
might suppose that neither class would reckon that a sufficient 
subsistence on which they had been supported, and that they 
would not add to their numbers but in a proportion less than the 
additional funds provided, so that the average individual incomes 
of both capitalists and laborers, would be equally and continually 
increased; or, finally, we might suppose that the capitalists 
would add more to their numbers than to their revenues, or that 
the laborers might do the same thing. 


Page 96. 


OF THE NATURE OF STOCK. 


325 

But though it might be difficult, a priori, to determine which 
of these would take place, yet, in fact, we generally find that, 
in the progress of society, the increase of the numbers of capi- 
talists does not keep pace with the increase of their stocks and 
incomes, while that of laborers does keep pace, or does more 
than keep pace with their incomes. 

The cause of this circumstance may, I think, be shortly stated, 
as follows. 

Marriage may be desired both for the pleasures of sense, and 
for those of sentiment and affection. But, among men of even 
moderate fortune, it does not in general add to the sum of their 
purely sensual gratifications. It were obviously absurd, consider- 
ing the lives which most young men in this class in Europe lead, 
to speak of celibacy as implying abstinence. Purely selfish mo- 
tives will never, therefore, lead such men to form this connexion. 
They will rather keep them from it, vanity aiding, or prompting 
them to the resolution of refraining from any such union, until 
they have a prospect of raising their families above their own 
rank. 

Among men in the laboring class, again, marriage generally 
adds to tbe amount of immediate sensual gratifications. Purely 
selfish motives, therefore, side with those of sentiment and affec- 
tion in prompting them to it, and they are not so apt to entertain 
the ambition of raising their families above their own condition. 
Hence, while capitalists are inclined to think that only a suffi- 
cient subsistence for their offspring, which exceeds what they 
themselves were supported on, laborers are content if they leave 
their children in the same condition with themselves. It thus 
happens, that the one class has a tendency continually to rise 
above the other. 

This separation has farther effects. 

Vanity itself is sometimes a coadjutor to the accumulative 
principle. A man’s pride is sensibly gratified by rising, as it is 
called, in the world, and placing himself on an equality with 
those to whom he was once inferior. But the further they are 
above him, the greater his difficulty in raising himself to their 
level, and the less his hopes of any gratification to mere vanity 
from this source. It is, I apprehend, in a great measure on this 
account, that as capital increases, there are fewer instances of 
laborers making vigorous efforts to accumulate property. Vanity, 


OF THE NATURE OF STOCK. 


326 

losing hopes of acquiring distinction by accumulation, is entirely 
occupied in exciting to dissipation. The laborer seeks preemi- 
nence in displaying his abilities to spend, and employs any 
spare funds he may possess in the purchase of fineries, in treating 
his companions at the ale-house, and in similar extravagancies. 

The prevalence of such habits and sentiments among the 
laboring classes, produces various evils. Neglect to employ any 
part of the earnings of to-day, in making provision for the wants 
of to-morrow, every now and then, when that morrow brings 
nothing for itself, gives rise to severe suffering. The condition 
of the laborer fluctuates between abundance and dissipation, and 
want and misery. The society loses, first, the benefits of that 
stock, which the laboring classes accumulate in a better state of 
things. It loses, also, the amount requisite to keep the laborer 
from starvation when in necessity, or to raise up other laborers, 
to supply the place of those who perish from want, or the dis- 
eases consequent on it. These may be called direct evils, those 
which are indirect are much greater. 

Waste accompanies dissipation. When laborers are in general 
improvident and extravagant, very many of them must be dis- 
honest. Men are naturally suspicious of persons whose expen- 
diture exceeds the bounds of prudence, and they have too often 
reason to be so. Honesty is at last the best policy, but it is 
only at last. Deceit and knavery very often succeed better at 
'first, and, therefore, people who look not beyond what is present 
and immediate, are very apt to resort to artifice and fraud, to get 
rid of the necessities which their extravagance brings on them. 
Hence, such a state of things would imply much watchfulness, 
many checks and contrivances to guard against fraud and vio- 
lence, and much loss, both from them and from the expensive 
machinery necessary to restrain them. The most prejudicial, 
however, of all the mischiefs that belong to our subject, brought 
on by vicious principles of action pervading the lower classes, is 
the gradual spread of similar manners and feelings through all 
the orders of the state. The middle and higher classes of society 
may be said to rest upon the. lower; when decay, therefore, 
infects the foundation, the structure must fall. By looking back 
for a generation or two, we shall find that nearly all the capital- 
ists in the nation have sprung directly from the people, and that 
to them we must finally trace the greater part of that honorable 


OF THE NATURE OF STOCK. 


327 


enterprise, frugality, and perseverance, which have given pros- 
perity and power to the state. When the principles that actuate 
the great lower and sustaining mass have a large mixture of 
benevolence, self-denial, and probity, and when there is nothing 
in the institutions of the society keeping them down as a degraded 
caste, there is a constant mounting upwards of the elements of 
health and strength, giving firmness and vigor to the whole body 
politic ; when, on the contrary, the proper vices of the higher 
ranks, luxury, extravagance, and their attendant evils, instead of 
being counteracted by a continual infusion of the severer manners, 
and mere self-denying morals, that should belong to the lower, 
find those orders partaking as far as possible their follies and 
levities, admiring them, and if required ready to minister to them, 
we may assure ourselves that much unsoundness lurks beneath 
whatever show of prosperity the outward condition of national 
affairs may exhibit. It will, I believe, be found that, in civilized 
societies, decay has generally thus proceeded from below upwards, 
and that a deficiency in the lower classes, of the principles exciting 
to economy, has gradually checked accumulation and invention 
throughout the whole body, and at length produced universal 
degeneracy and decay, and introduced the reign of waste and 
violence. “ Semper in civitate, quibus opes nullae sunt, bonis 
invident ; vetera odere, nova exoptant ; odia suarum rerum 
inutare omnia petunt.” 

The experience of all ages proves the justice of the observa- 
tion of the Roman historian. That state can never enjoy tran- 
quility, which is oppressed by a crowd of 

“ Hungry beggars, 

Thirsting for a time of pell-mell havock 

And confusion.” 

But to trace at length the connexion between these is impossible, 
without reference to the subjects of rent, and of population, which 
are not embraced in our plan. I may, however, in conclusion, 
observe that though, for the sake of simplicity of exposition, I 
have assumed, all along, that the wages of labor constitute an 
invariable quantity, I yet conceive that, in a society making a 
steady and healthy progress, they should rather be continually 
increasing, the laborer as well as the capitalist, gaining something 
by the improvements which the progress of invention produces. 


CHAPTER XV. 


OF THE WEALTH OF NATIONS AS A BRANCH OF THE PHILOSOPHY OF 
INDUCTION. 

It will be perceived that there is an essential difference be- 
tween the modes of investigation .which I have followed in the 
preceding pages, and those guiding the speculations of the cele- 
brated philosopher, from whose opinions I venture to dissent. 
Where the principles of investigation are different, the conclusions 
arrived at can hardly agree ; and I scarce think, therefore, that 
I should assist the reader in forming an opinion on the subject, 
by entering into a particular discussion of the points in which we 
are at variance. The views I have endeavored to unfold must, 
in so far, stand alone. 

It so happens, however, that concerning the principles of inves- 
tigation themselves, there is a common standard to which the 
disciples of Adam Smith refer, and on the rules drawn from which, 
I also conceive, the determination of the questions debated must 
ultimately rest. Adam Smith has been said to have made politi- 
cal economy a science of experiment, a branch of the inductive 
philosophy.* Now, I apprehend, that the spirit of the philoso- 
phy of the author of the Wealth of Nations was completely 
opposed to the inductive philosophy — the philosophy of Bacon, 
and that he never intended that that work should be received as 
if established on it. If the reader agree with me, he will proba- 
bly consider that the whole discussion here, in a measure termi- 
nates. In placing before him the reasons for my belief, I shall 
confine myself, as much as possible, to transcribing the words of 
the Novum Organum, on the one side, and those of Adam Smith, 
in some of his speculations, on the other. 

* Say’s Introduction and note on Storch, p. 23.' tome I. 


OF THE NATURE OF STOCK. 


3‘29 


Lord Bacon affirms, that there always have been, and must 
be, two sorts of philosophy — the popular, and the inductive; 
or, as they might perhaps be denominated, the philosophy of 
system, and of science. In the one, the mind explains natural 
phenomena according to its preconceived notions, in the other, 
it traces out, by a careful interpretation, the real connexions be- 
tween them.* The former will always be the most popular, and 
on account of its facility of explication, and its fitness for the 
purposes of argument, will maintain its place in the discussion of 
all subjects of general interest ; while the latter must be confined 
to a few, its spirit being difficult to seize, above the grasp of the 
commonalty, and only to be comprehended by them in its effects. 

It is not difficult to perceive the foundation on which each of 
the two systems rests. 

Necessity obliges men to attend to the phenomena around 

* Nos siquidem de deturbanda ea, qure nunc floret, philosophia, aut si qure 
alia sit, aut erit, hac emendatior, aut auctior, minime laboramus. Neque 
enim officimus, quin philosophia ista recepta, et aliae id genus, disputationes, 
alant, sermories ornent, ad professoria munera, et vitae civilis compendia, ad- 
hibeantur, et valeant. Quin etiam aperte significamus, et declaramus, earn 
quam nos adducimus philosophiam, ad istas res admodum utilem non futuram. 
Non presto est; neque in transitu capitur ; neque ex prrenotionibus intellectui 
blanditur ; neque ad vulgi captum, nisi per utilitatem, et effecta descendet. 

Sint itaque (quod felix faustum que sit utrique parti) dure doctrinarum 
emanationes, ac dure despensationes ; dure similiter contemplantiuin, sive 
philosophantium tribus, ac veluti cognationes ; atque illre neuticum inter se 
inimicffi, aut alienre, sed frederatre, et mutius auxiliis devinctre; sit denique 
alia scientias colendi, alia inveniendi ratio. Atque quibus prima potior et 
acceptior est, ob festinationem, vel vitae civilis rationes, vel quod illam alter- 
am ob mentis infirmitatem capere et complecti non possint (id quod longe 
plurimis accidere necesse est,) optamus, ut iis feliciter, et ex voto succedat, 
quod agunt ; atque ut quod sequuntur, teneant. Quod si cui mortalium cordi 
et curre sit, non tantum inventis hrerere, atque iis uti, sed ad ulteriora pene- 
trare ; atque non disputando adversarium, sed opere naturam vincere ; deni- 
que, non belle et probabiliter opinare, sed certo et ostensive scire ; — Atque 
ut melius intelligamur, atque illud ipsum quod volumus, ex nominibus 
impositis magis familiariter occurat; altera ratio, sive via, anticipatio mentis; 
altera, interpretatio natures, a nobis appellari consuevit.” Prref. II. Instaur.' 

“ Ut cunque enim varia sint genera politiarum, unicus est status scientia- 
rum, isque semper fuit et mansurus est popularis. Atque apud populum 
plurimum vigent doctrinre, aut contentiosre et pugnaces, aut speciosre et 
inanes; quales videlicet assensum aut illaqueant, aut demulcent.” Prref. 
Inst. ' 

11 Quinetiam significamus aperte, ea, qure nos, adducimus, ad is tas res non 
multum idonea futura ; cum ad vulgi captum deduci omnino non possint, 
nisi per effecta et opera tantum.” Lib. I. c. xxviii. 

42 


330 


OF THE NATURE OF STOCK. 


them, to mark their actual successions, and to name them. 
They have thus a store of general facts, and of regular expressions 
for them. These, however, refer not to the laws of the general 
system themselves, but to the phenomena or events, the conse- 
quences of those laws. 

Their farther discussions regarding them may be undertaken 
for the purpose either of explaining , or of investigating them. 
If for the former they will refer to principles already admitted ; 
that is, to known modes of succession. If for the latter, they 
will search for the causes on which those common successions 
proceed. An example will render this plain. 

In the earliest stages of society, and before speculation com- 
menced, men would make some general observations concerning 
the motions of the different bodies about them. They would 
observe, for instance, that, unless prevented by some obstacle, 
most bodies fall to the earth. Adopting this observation as a 
general rule, when they saw one so falling, they would conceive 
of the event as a usual or natural occurrence. A savage, when, 
in traversing the forest, he sees a rotten branch break off and 
fall to the ground, thinks of it as an event which is a necessary con- 
sequence of its nature, and, if his language furnished the expres- 
sion, might say it was a natural motion in it as a heavy body. 
Were he to see the same broken branch moving rapidly through the 
air upwards, or horizontally, he would conceive of it as not pro- 
ceeding from its own nature, but from some disturbing cause, and 
might call it a motion produced by violence. He would observe 
too, that some substances, as air, and what he calls fire, rise 
upwards. He would so conclude, that all light bodies ascended. 
In the same manner, the heavenly bodies seem to him to have 
naturally a circular motion. 

Let us now suppose that the two sorts of philosophy: 1st. the 
explanatory or systematic, and 2d. the inductive or scientific, in 
pursuit of their respective objects, apply themselves to the con- 
sideration of the complicated series of phenomena, connected 
with sensible motions of all sorts. 

As what is conceived to be already known requires no expla- 
nation, the philosophy of system takes things which, because 
familiar, are admitted as obvious, as the media for explaining all 
other things. To do otherwise, were to undertake a work foreign 
to its objects. In this way, under its hands, the practical rules 


OF THE NATURE OF STOCK. 


331 


of the observer, become the speculative principles of the philo- 
sopher. Motion is divided into natural, and violent. Certain 
bodies have a natural tendency downwards, others upwards, 
others to move in a circle.- From these principles, the whole 
phenomena are explained in a plausible manner, and arranged 
in a systematic form. Such was the plan of the philosophers of 
Greece, and such their pseudo science of motion. It is evident, 
that however it might systematize and explain facts already 
known, it could not conduct to new truths. It could not lead 
farther than the principles from which it set out, and these evi- 
dently embraced not the laws of the general system of things, 
but only circumstances, the results of those laws. 

The philosophy of induction has for its object the discovery 
of truth. It seeks for the laws regulating the general system. 
As it is the aim of the other to explain plausibly, its aim is to 
investigate strictly. What, consequently, are to the one ultimate 
principles, are to the other collections of facts, the causes of which 
are to be inquired into. When, therefore, this philosophy ap- 
plied itself to the consideration of the phenomena of motion, it 
pronounced the whole antecedent system factitious and foreign to 
its objects, and commencing their investigation sagaciously and 
diligently anew, it discovered the real and simple laws regulating 
the various series of these events.* 

To which of those opposite sects does Adam Smith belong? 
and on which of these two modes are the principles guiding his 
speculations framed? 

To me it appears that his philosophy is that of explanation 
and system, and that his speculations are not to be considered as 
inductive investigations and expositions of the real principles 
guiding the successions of phenomena, but as successful efforts 
to arrange with regularity, according to common and preconceived 
notions, a multiplicity of known facts. 

My reasons for this opinion are drawn, 1st. from the object 
at which his philosophy aims : 2d. from the methods which he 
adopts to attain it: 3d. from the consequences which have result- 

* Etiam quum de causis motuum aliquid significare volunt, atque divi- 
sionem ex illis instituere, differentiam motus naturalis et violenti, maxima 
cum socordia, introducunt ; quae et ipsa omnino ex notione vulgari est ; cum 
omnis motus violentus etiam naturalis revera sit, — ista mere popularia sunt, 
et nullo modo in Naturam penetrant. Nov. Org. Lib. J. lxvi, 


332 


OF THE NATURE OF STOCK. 


ed from his labors. I shall arrange the proofs for the justice of 
this conclusion, which I purpose submitting to the reader, accord- 
ing to these three heads ; contrasting in each the spirit and con- 
sequences of his speculative principles with those of the inductive 
philosophy. 

I. According to Adam Smith ‘‘Wonder, and not any expecta- 
tion of advantage from its discoveries, is the first principle which 
prompts mankind to the study of philosophy, of that science 
which pretends to lay open the concealed connexions that unite 
the various appearances of nature;* * * § — philosophical systems are 
to be considered as mere inventions of the imagination, to con- 
nect together the otherwise disjointed and discordant phenomena 
of 'nature.” — “A philosophical system is an imaginary machine 
invented to connect together in the fancy, those different move- 
ments and effects, which are already in reality performed.” f 

It is needless to say that this account of the object of philoso- 
phy is quite opposite to that given in the Novum Organum. 
The passages already quoted may show this and many others 
might be adduced. It is throughout the endeavor of the founder 
of the experimental philosophy to hold out truth itself, and the 
benefits to be derived from it as its object, to show that this we 
can never reach by any effort of the mere reasoning and imagin- 
ative faculties, or in any other manner than through patient 
induction, f and that that framing of systems explanatory of things 
already known is foreign to its purposes. <§> 

* 4 ids. to Qolv[i6l , C > eiv bi bcvdpconoi real vv v nod t b 7tpmov \p%ay1o (piloao- 
<peiv, &c. Arist. Lib. I. Cap. 2. Metaph. 

t These passages are quoted from one of his posthumous works : “ The 
Principles which lead and direct Philosophical Inquiries, illustrated by the 
History of Astronomy, of Ancient Physics, Logic, and Metaphysics.” It may 
perhaps be thought that in this work he represents only what he conceives 
to be the actual path of philosophy, not that which it should pursue. 1 do 
not think so, because the declarations of his particular friends intimate the con- 
trary ; thus his editors say, in reference to the fragment on Astronomy, that 
it is to be viewed as an additional illustration of those principles of the hu- 
man mind, which Mr. Smith has pointed out to be the universal motives of 
philosophical researches. Dugald Stewart, also, in his life and introductory 
dissertation intimates the same thing. The best proof, however, is in the 
course he actually himself pursued. 

t Etenim verum examplar mundi in intellectu humano fundamus ; quale 
invenitur, non quale cuipiam sua propria ratio dictaverat. — Itaque ipsissimaa 
res sunt (in hoc genere) veritas et utilitas. Nov. Org. Lib. I. exxiv. 

§ Rursus, si alius quispiam fortasse veritatis inquisitor sit severior ; tamen 


OF THE NATURE OF STOCK. 


333 


II. Philosophy being thus, according to Adam Smith, an art 
addressing itself to please the imagination, it gains its end by 
searching for some common and familiar observation, and making 
it serve as the means of connecting ^ny series of interesting events, 
to the consideration of which curiosity may direct the attention. 
“In the mean time it will serve to confirm what has gone before 
and to throw’ light upon what is to come after, that we observe, 
in general, that no system, how well soever in other respects 
supported, has even been able to gain any general credit on the 
world, whose connecting principles were not such as were famil- 
iar to all mankind.” * It is by this circumstance that he judges 
of the merit of all philosophical systems, and the superiority of 
Sir Isaac Newton over Des Cartes, consists, according to him, 
in his discovering that he could join together the movements of 
the planets by so familiar a principle of connexion as that of 
gravity, which completely removed all the difficulties the imagin- 
ation had hitherto felt in attending to them.j* 

No doctrine, certainly, can be more opposed to the spirit of 
the philosophy of Bacon than this. It is this propensity to gen- 
eralize immediately from a few familiar notions, that he all along 
represents as the vice of the antecedent system-builders, and the 
error which his followers have to guard against. “ There have 
been, and can be,” he says, “but two modes of searching after 
truth. The one commencing the chain of reasoning with some 
familiar conception of things, flies from them immediately to 
general axioms, and from these, and their assumed incontroverti- 
ble truth, judges of all particulars. A way of philosophizing 
brief, but rash; easy and well fitted to conduct to disputes, but 
not leading to a knowledge of nature. This is the common 
mode. The other rises gradually and slowly from fact to fact 
and only at last arrives at the most general conclusions. These, 
however, are not notions, the products of the imagination, but 

et ille ipse talern sibi proponet veritatis conditionem, quae menti, et intelleetui 
satisfaciat in redditione causarum, reram quae jampridem sunt cognitae ; non 
earn quae nova operum pignora, et novam axiomatum lucem assequatur. lta- 
que si finis scientiarum a nemine adhuc bene positus sit, non mirum est, si 
in iis, quae sunt subordinata ad finera, sequatur aberratio. Nov. Org. 

* History of Astronomy. 

t History of Astronomy. Pessimum enim omnium est augurium quod ex 
consensu capitur in rebus intellectualibus. Nihil enim multis placet, nisi 
imaginationem feriat, aut intellectum vulgarium notionum nodis astringat, ut 
supra dictum est. Nov. Org. Lib. I. lxxvii. 


334 


OF THE NATURE OF STOCK. 


real laws of nature, and such as she herself will acknowledge and 
obey.* Of the two, the former, the explanation of things accord- 
ing to preconceived notions, much more easily gains assent than 
the latter, its principles, collected from a few facts, and these of 
familiar occurrence, seize on the judgment, and fill the imagina- 
tion. Whereas, on the other hand, a real interpretation of 
nature must find its materials in things very various in themselves, 
and gathered together from different quarters, cannot make a 
forcible impression on the mind, and must necessarily appear to 
it as something harsh, unusual, and mysterious. Hence in all 
chains of reasoning, having for their object not to gain a knowl- 
edge of nature, but to direct the opinions of men, the mode of 
philosophizing which proceeds by arguing from preconceived 
notions, will always be the most successful.”! 

I believe it will be found, that the practice of the author of 
the Wealth of Nations, every where agrees with his theory, and 
that he has himself, in all his speculations, adopted the explana- 
tory and systematizing form of philosophizing, instead of the 
scientific and inductive, conforming himself to those principles 
which he has pointed out as leading and directing philosophical 
inquiry, and according to the accuracy of their agreement with 
which, all systems of nature have constantly, he tells us, “ failed 
or succeeded in gaining reputation and renown to their authors 
and that, his object being every where to build common facts and 
familiar observations into a system, not to inquire into the causes 
or real laws from which they spring, he takes those things for 
fundamental principles which would present themselves to the 

* “ a sensu et particularibus primo loco ad maxime gcneralia advoletur, 

tanquam ad polos fixos circa quas desputationes vertantur ; ab illis coetera per 
media deriventur ; via certe compendiaria, sed prsecipiti ; et ad Naturam im- 
pervia, ad disputationes vero proclivi et accommodata. At secundum nos, 
axiomata continenter, et gradatim excitantur, ut nonnisi postremo loco ad 
generalissima veniatur ; ea vero generalissima evadunt, non notionalia, sed 
bene terminata ; et talia qu® Natura ut revera sibi notiora agnoscat, quodque 
rebus hcereant in medullis.” Nov. Org. Prsef. et lib. I. xviii. xix. 

1 Quin longe validiores sunt ad subeundom assensum anti cip ationes, quam 
interpretationes ; quia ex paucis collect®, iisque maxime quae familiariter, 
occurrunt, intellectum statim perstringant, et phantasiam implent; ubi contra, 
interpretationes, ex rebus admodum variis et multum distantibus sparsim 
collect®, intellectum subito percutere non possunt ; ut necesse sit eas, quoad 
opiniones, duras et absonas, fere instar mysteriorum fidei videri. In scientiis, 
quffi in opinionibus et placitis fundat® sunt, bonus est usus anticipationum 
et dialectic® ; quando opus est assensum subjugare,non res. Ib. Lib. I.xxviii. 


OF THE NATURE OF STOCK. 


335 


inductive inquirer as phenomena, the principles of which his 
manner of philosophizing would call on him to investigate. 

In the catalogue of our author’s works, the Theory of Moral 
Sentiments ranks next to the Inquiry into the Nature and Causes 
of the Wealth of Nations. On what is it founded ? A general- 
ization from what is termed sympathy — a principle than which 
there is perhaps no one more sensible to every individual, more 
capable of serving as a familiar bond of connexion between the 
phenomena of the moral world, or better fitted therefore, for the 
purposes of the systematic philosopher ; but than which, also, 
there is, probably, no single circumstance in the combined actions 
of the mind and body, that would appear to the inductive philoso- 
pher more deserving of being itself investigated. 

A person enters for the first time an hospital, and the spectacle 
is presented to him of an individual undergoing a severe operation. 
As at each cut of the knife he sees the flesh divided, the muscles, 
vessels, and nerves exposed, the blood flowing from the large, 
gaping, quivering wound, and as he hears the stifled groans of the 
sufferer, he is conscious of a strange, tremulous sensation, stealing 
rapidly ovei his frame, a cold dew stands on his forehead, his 
features contract, he breathes with difficulty, his limbs sink under 
him ; — in fact, he will be found to be in the very same state with 
the person operated on, in all respects, but that he feels not the 
acuteness of torturing pain, and is not subject to the quickening 
reaction produced by it. The vital powers therefore very possi- 
bly yield for a little, he faints, is carried out to the v fresh air, and 
in a few minutes walks off* astonished at the strangeness of the 
occurrence. When he reaches his home, he learns that an inti- 
mate friend has suffered a great calamity, and the intelligence 
deeply afflicts him. In both cases he suffers, or sympathizes, 
with another person. But are the two precisely alike ? are we 
warranted to assume, with Adam Smith, that the laws governing 
them are the same ? and is there not a singular blending in both 
of mental and corporeal phenomena, all the circumstances of the 
actions and reactions of which are deserving of the minutest in- 
vestigation from one, who would set about an inductive inquiry 
into the principles of our compound nature ? 

The picture, which, adopting the common notion of sympathy 
as the point of view, he has given of the phenomena of the moral 
world, is exceedingly interesting and comprehensive, and as a sys- 


336 


OF THE NATURE OF STOCK. 


tem regularly arranging a vast mass of facts, is very valuable. 
Here, however, its merits cease. No one, I apprehend, will now 
cite it, as truly developing the nature of our intellectual being, 
as an addition to the science of mind.* 

Similar observations will apply to his fragments on the imita- 
tive arts. He adopts in them the hypothesis that the pleasure 
they give arises from some difficulty in the execution being over- 
come, and it seems to have been his intention to build up a 
whole system of art on this principle. Perhaps no circumstance 
can be found, running more through all the arts, and, therefore, 
better fitted for the connecting purposes of the system-builder, 
or, on the other hand, more curious in itself, and which, there- 
fore, the inductive philosopher would be more inclined to inquire 
into. How is it, that the images of the poet come upon us with 
most force, when he puts his words into measured cadence ? 
How is it that an ideal form, if struck out of marble, affects us 
so much more than if moulded in w T ax ? Is it that the spirit, 
when fully roused, and striving to embody some great sentiment, 
or strong emotion, naturally seizes on the materials which may 
best betoken energy, and thus contrives to give an additional air 
of intellectuality to mere matter? — This or a series of such 
questions present themselves to the inductive inquirer. What 
to the systematic philosopher affords the means of explaining 
other things, is to him the subject itself of inquiry. 

But, of all his speculations, there is none in which he seems to be 
more completely the philosopher of system and explanation than 
in the Wealth of Nations. It is a system entirely founded on the 
most common and familiar notions, and proceeds altogether on 
the generalization of them. Value , riches , stock , capital , wealth , 
profit , self-interest , the desire of bettering one’s condition , are 
evidently of this sort. They are manifestly terms of ill-defined 
import, referring to notions drawn hastily, and confusedly, from 
the course of passing events ; “ notiones confusae, et temere a 
rebus abstract®.” And the strain of his reasoning upon them is 
that proper to the philosophy of system, which, taking from 
experience the most common and familiar observations, applies 
itself not to inquire into them, but to form a theory out of them. 
“ Rationale enim genus philosophantium ex experientia arripiunt 

* See the account given of it by his admirer and disciple, Sir James Mac- 
intosh, in his Ethical Systems. 


OF THE NATURE OF STOCK. 


337 

varia et vulgaria, eaque neque certo comperta, nec diligenter 
examinata Gt pensitata , rehqua meditationc, atquG ingGnii a tr i- 
tatione ponunt.” If we, therefore, view his work as an attempt 
to establish the science of wealth, on the principles of the experi- 
mental or inductive philosophy, it is exposed to the censure of 
transgressing every rule of that philosophy. 

“ Men are inclined to think that it is not necessary to inquire 
into the causes of events that are common and happen every 
day, but, taking them for things too evident and manifest to 
require explanation, assume them as causes sufficiently account- 
ing for phenomena, that are not of so frequent and familiar occur- 
rence. Whereas, in reality, no judgment can be formed of events 
which are rare and remarkable, nor can any thing new be brought 
to light, without an accurate investigation of the causes, and 
even the causes of the causes of things, that are the most com- 
mon and familiar.” * 

The reason of this will be evident, by referring to the example 
before adduced. If a man, as in the case of the savage, who is 
totally unacquainted with the system of things but as they pre- 
sent themselves to the eye of the practical observer, be asked 
why a stone falls to the ground, he would answer, “ it is its 
nature, all heavy bodies fall to the ground.” “ Why does smoke 
ascend?” “It is its nature, all light bodies mount upwards.” 
“ Why, when a stone is seen flying through the air, do you look 

* Atque de istis rebus, quae videntur vulgatse, illud homines cogitent ; 
solere sane eos adhuc nihil aliud agere, quam ut eorum, quae rara sunt, 
causas ad ea, quae frequenter hunt, referant et accommodent : at ipsorum, 
quae frequentur evenuint, causas nullas inquirant, sed ea ipsa recipiant tanquam 
concessa et admissa. 

Itaque non ponderis, non rotationis ccelestium, non caloris non frigoris 
non luminis, non duri non mollis, non tenuis, non densi , non liquidi, non 
consist entis, non animati, non inanamiti, non similaris , non dissimilaris , 
nec demum organici causas quaerunt; sed illis tanquam pro evidentibus et 
manifestis receptis, de caeteris rebus, quae non tarn frequenter et familiariter 
occurrunt, disputant et judicant. 

Nos vero, qui satis scimus nullum de rebus raris aut notabilibus judicium 
fieri posse, multo minus res novas in lucem protrahi, absque vulgarium 
rerum causis et causarum causis rite examinatis et repertis; necessario ad 
res vulgarissimas in historiam nostram recipiendas compellimur. Quenetiam 
nil magis philosophiae offecisse deprehendimus, quam quod res, quae familiares 
sunt et frequenter occurrunt, contemplationem hominum non morentur et 
detineant, sed recepiantur obiter neque earum causae quaeri soleant : ut non 
saepius requiratur informatio de rebus ignotis, quam attentio in notis. Nov. 
Org cxix 


43 


338 


OF THE NATURE OF STOCK. 


about to find out the reason of it ? ” “ Because it is against its 

nature, and I know, therefore, it must have been produced by 
violence — by some external force.’’ Thus, too, among mere 
practical observers of events, there would come to be the terms 
gravity, levity, natural and violent motion. Now all these words 
and phrases, if correctly interpreted, are perfectly correct, accord- 
ing to the measure of the knowledge of the individuals, and 
assume nothing but what their experience warrants. When it is 
said that smoke ascends in consequence of its levity, or because 
it is the nature of it and other light bodies to ascend, nothing 
more is necessarily implied in the words than that there is some- 
thing, — what is not known, — arising from the general constitu- 
tion of things, from the system of nature itself, causing that 
ascent, and that, while this general constitution of things remains 
unaltered, all such bodies will ascend. So it is when it is said 
that it is against the nature of a stone to move in any direction 
but downwards, and that its other motions must be violent. The 
expressions, in strictness, mean nothing more than that unless 
acted on by some extraneous cause, while the present condition 
of things lasts, if it move at all, its motion will be directly down- 
wards. All these are conclusions drawn from experience, and 
form general rules of real practical utility. Science will never 
teach the savage to shape, to trim, or to preserve the poise of 
his canoe, better than observations similar to these have already 
taught him. 

When now the systematic philosopher applies himself to ac- 
count for, and range in regular order, the various phenomena refer- 
able to matter and motion, his object being merely explanation 
and arrangement, he naturally sets out from common and familiar 
notions, and principles which no one doubts of, and applies all 
his powers to tracing out from their operation some explanation 
of the phenomena in question. “ Reasoning on these familiar 
notions, from a few particulars, and perhaps some generally ad- 
mitted maxims, he rises immediately to the most general conclu- 
sions, and from their fixed and immutable truth judges all other 
particulars. If some of them seem contrary to his theory, he 
employs his ingenuity to explain them away, or to make them 
appear coincident, or removes the difficulty by terming them 
exceptions ; while such particulars as are not opposed to his 
principles, are laboriously and artfully arranged, according to his 


OF THE NATURE OF STOCK. 


339 


system.” * Omitting, for the present, the consideration of what 
he actually accomplishes, let us attend to that wherein he fails. 

The familiar notions of the common observer become his con- 
necting media, and he pretends to account for the whole phe- 
nomena of matter and motion, on the principles, as he calls them, 
of gravity, levity , natural and violent motion. Now it is obvi- 
ous that, by this application of the terms, he completely, though 
imperceptibly, changes their meaning. As employed by the 
man of practical observation, though perhaps somewhat confusedly 
conceived, they necessarily and really mean nothing more, than 
certain known consequences, the results of some unknown laws 
or powers regulating the system of things. As employed by 
the systematic philosopher, they, on the contrary, are assumed 
to be the very laws, powers, or principles, themselves governing 
and sustaining the mundane system. The change in signification 
is not perceived, for the generality of mankind are incapable of 
any thing like metaphysical accuracy of conception, and are led 
away very easily by the fallacies of language. Its consequences, 
however, are important, for if we understand by science the 
knowledge of the real laws of nature, — the laws governing the 
general system, — this assumption completely diverts from their 
discovery, for it induces the belief that they are already reached. 
It seems to be on this account, that Lord Bacon so often points 
out the errors arising from the hasty adoption of preconceived 
notions, “ anticipationes,” the greater part of the first book of the 
“ Novum Organum ” consisting, in fact, of an exposition of 
them.f Acuteness of reasoning, and reach of thought are thus, 

* Formam enim inquirendi et inveniendi apud antiquos et ipsi profitentur, 
et scripta eorum prre se ferunt. Ea autem non alia fuit, quam ut ab exempli 
quibusdam et particularibus (additis notionibus communibus, et fortasse por- 
tione nonnulla ex opinionibus receptis, quae maxime placuerunt) ad conclu- 
siones maxime generalia sive principia scientiarum, advolarent; ad quorum 
veritatem immotam et fixam, conclusiones inferiores per media educerent 
ac probarent, ex quibus artem constituebant. Turn dernurn si nova particularia 
et exempla mota essent et adducta, qu® placitis suis refragarentur ; ilia aut 
per distinctiones, aut per regularum suarum explanationes, in ordinem sub- 
tiliter redegebant; aut demum per exceptiones grosso modo summovebant. 
At rerum particularium non ref'ragrantium causas, ad ilia principia sua 
laboriose et pertinaciter accommodabant. Verum nec historia naturalis et 
experientia ilia erat, quam fuisse oportebat (longe certe abest ;) et ista advo- 
latia ad generalissima, omnia perdidit. Nov. Org. L. I. cxxv. 

t “ Non, si omnia omnium aetatum ingenia coierent, et labores contulerint 


340 


OF THE NATURE OF STOCK. 


he observes, rendered useless, for they come too late. The 
place for them is in examining and weighing experiences, and 
from these deducing first principles.* If this be omitted no 
subtilty of definition, or logical accuracy of deduction can avail. 
The remedy is too weak for the evil, nor is itself void of evil. 
The instrument employed is not fitted to reach the depths of 
nature, and, by catching after what it cannot attain to, is rather 
calculated to establish error, than to open up the road to truth. 
The definitions may indeed sufficiently mark the sense, and from 
these definitions the conclusions insisted on may be logically 
deduced, nevertheless there is this of deceit in the procedure, 
that the notions themselves may be taken up hastily, and care- 
lessly from common observation, and may, therefore, be confused, 
and loose, and afford no solid foundation for the edifice which it 
is attempted to rear.” f Such was the system of physics which 
the Greeks raised from these principles. Being built on com- 
mon and familiar notions ; a conversion of general practical rules 
into speculative general principles, whatever its merits were as a 
system, explaining according to popular notions, the various 
phenomena of nature, and ranging these in regular order, it had 
no pretensions to merit as expository of the real science of 
nature. 

It was not until attention was directed to the examination of 
things before supposed to be known, — 'motion, natural and vio- 
lent, gravity, levity, &c. — and inquiry made into the principles 
by which they themselves are regulated, the laws, that is to say, 
according to which the phenomena, so denominated, are produced, 
that a beginning was given to real science. Then the laws regu- 

et transmiserint, progressus magnus fieri poterit in scientiis per anticipa- 
tiones : quia errores radicales, et in prima digestione mentis ab excellentia 
functiorum et remediorum sequentium non curantur.” Nov. Org. Lib. I. 

XXX. 

* Ibid. c. xxi. 

1 “ Verum infirmior ornnino est malo medieina ; (. Ars dialectica scilicet ) 
nec ipsa mali expers — naturae enim subtilitatem longo inter vallo non attingit ; 
et prensando quod non capit, ad errores potius stabiliendos, et quasi figendos, 
quam ad viam veritati aperiendam valuit— hoc subest fraudis, quod syllogis- 
mus ex propositionibus constet, propositiones ex verbis, verba autem notionum 
tesserae e^ signa sint. Itaque si notiones ipsae mentis (quae verborum quasi 
anima sunt, et totius hujusmodi structurae ac fabrieae basis) male ac temere 
a rebus abstract®, et vagae, nec satis definitae et circumscriptae, denique multis 
jnodis vitiosse fuerint, omnia ruunt.” Nov. Org. Praf. 


OF THE NATURE OF STOCK. 


341 


lating the universal system were gradually unfolded, and things 
seemingly forever hidden in the depths of the immensity of space 
and time, brought clearly before the intellectual ken of man. 

As in the system of things making up the world of mere 
matter, certain terms are employed to denote general facts and 
rules, which experience has taught, so, in the compound system 
of men and things making up the world of civilized life, certain 
other terms are employed to denote the general facts and rules, 
which experience also has there taught ; and as in a department 
of the one, we have heaviness , lightness , natural , and violent 
motion, Szc. ; so in a department of the other we have capital , 
value , profit , a due regard to self-interest , &zc. ; in both, too, it 
is to be observed, such popular and familiar phrases and notions, 
correctly interpreted, express, not the general laws of the system, 
but the usual and expected results of those laws. 

Thus, if, in any particular society, one were to be asked, what 
the capital of some other person were, he might answer, “ about 
a thousand pounds.” If farther requested to state his reasons for 
saying so, he might reply, “ the property he holds would fetch 
that in the market, he has been offered that for it,” or, “ I know 
it cost him that, and that he laid out his money judiciously.” 
These are all the answers he would think of giving ; for common 
purposes they are all he requires to give, and they are all that 
his notions actually embrace. If asked again, “ what revenue 
does this person derive from his capital ? ” he might answer, “ I 
suppose about that which such a capital generally yields, the 
usual profits of stock — a fair, reasonable, mercantile profit, neither 
much above or below par.” If questioned farther, as to the 
nature of this capital, and its return, which he terms profit, he 
would answer, if simply a practical observer, “ Really as to 
this I have never inquired, I know that where I have lived, and 
I believe in all civilized societies, certain things, if sold, have cer- 
tain values, bring certain sums of money, and if kept and judi- 
ciously employed, yield certain amounts of money, or moneys’ 
worth. Why they do so, though it must arise, no doubt, from 
the circumstances and actions and reactions on each other of the 
various things and persons forming these societies, I have not 
examined into, and do not pretend to know.” His answer, in 
short, would be that he knows them only as results of the laws 
governing the general system of which he makes a part. 


342 


OF THE NATURE OF STOCK. 


By taking, therefore, these, and such like common and fami- 
liar notions, as the foundation of his reasoning, Adam Smith made 
his work an explanatory system, not an inductive inquiry. The 
principles of the inductive philosophy would have led him to 
inquire into the nature of those familiar notions, — into the laws 
or causes of those common occurrences ; and he , would have set 
out with the question, What is it, in the nature of man and matter, 
that makes any thing constitute a capital, or yield a profit? In 
the words of the Novum Organum, already cited, he would have 
considered, “that no judgment can ever be formed of things that 
are rare and remarkable, much less can any thing new be brought 
to light, unless the causes, and even the causes of the causes, of 
occurrences the most common and familiar, be rigidly examined 
and clearly discovered.” 

It is, therefore, an abuse of words to say, that the publication 
of the Inquiry into the Wealth of Nations, rendered political 
economy a science of experience.* It made it so in no other 
manner than as every philosophical system is, of necessity. They 
are all, of necessity, founded on some observations, the fruits of 
experience.! The difference between them is, that those obser- 
vations which men make concerning the general results of the 
laws of the universe, and to which convenience leads them to 
give names, are assumed by the systematic philosopher for the 
laws themselves, and that the scientific inquirer examines them 
patiently, and perseveringly, and ascending gradually, from one 
thing to another, endeavors thus at last to reach the real laws of 
nature. While the one assumes phenomena for principles, the 
other applies to the things giving rise to those phenomena, and 
collecting, comparing, and arranging these, traces out the real 
connexions between them, the real principles governing nature. 

I s. 

* “ Unc science experimentale,” Say. See note on Storch, p. 24, vol. I. 
•of the “ Cours d’Econome Politique,” where he declares it to be precisely 
similar to modern mechanical science, “ la mecanique analytique.” The 
comparison should have been, as we have seen, with the ancient mechanical 
philosophy. 

t “ Neque ill ad quenquam moveat, quod in libris ejus (Aristolelis) de ani- 
malibus, et in problematibus, et in aliis suis tractatibus, versatio frequens sit 
in experimentis. Ille enim prius decreverat, neque experientiam ad consti- 
tuenda decx*eta et axiomata rite consuluit ; sed postquam pro arbitrio suo de- 
crevissit, experientiam ad sua placita tortam circumducit, et captivam; ut 
hoc etiam nomine magis accusandus sit, quam sectatores ejus moderni (scho- 
lasticorum philosophorum genus) qui experientiam omnino deseruerunt.” 
Nov. Org. ib. L. I. lxiii. 


OF THE NATURE OF STOCK. 


343 

We may easily satisfy ourselves of the difference of the prin- 
ciples which true science reaches, and those employed in the 
Wealth of Nations, by taking any of the latter and seeing how 
it agrees with the rules by which the former may be tested. 
Thus the principle, that sell-interest is the great and all-sufficient 
cause of the increase of wealth, both private and public, is evi- 
dently nothing else than an application of the common assumption 
that a man’s fortune and his interest are the same, and a generali- 
zation ol the observation that he, therefore, who understands his 
interest best and takes best care of it, will get rich the fastest. 
But if self-interest be, in the scientific sense, the cause of wealth, 
both public and private,* * * § (the law according to which it either is, 
or is not produced,) whenever self-interest, (the desire of bettering 
one’s condition) manifests itself in action, it must tend to the 
increase of public wealth. f 

Do the labors of the cool, calculating, gambler, or of the 
sharper, add to public wealth ? Does the spirit of keen bargain- 
ing, and taking every possible advantage of those with whom 
transfers are effected, that sometimes pervade classes, and com- 
munities, add to public wealth ? Assuredly not ; yet in all these 
self-interest is the ruling motive of action. Let it not be said, 
that these are exceptions to a general rule. Though there may 
be exceptions to general rules, there are no exceptions to scien- 
tific principles. “ Wherever a scientific cause, or law, or princi- 
ple operates, there the thing itself, of which it is said to be the 
cause, is necessarily produced. And it may be universally 
affirmed that, where this the form is, there the thing sought is 
also, and where it is not, there the thing cannot be.J Nothing 
is to be received for the true scientific cause, unless the thing of 
which it is the cause, increases and decreases along with it.<§> 

* Desir de 1’ horame d’ ameliorer son sort : principe qui est au monde moral, 
ce que la gravitation est au monde phisique. Storch. 

t It will be observed that 1 here, and throughout, speak of self-interest in 
the common and familiar sense. The author of the Theory of Moral Senti- 
ments was not an utilitarian. If the reader happen to be so, he will perceive 
that the argument is not altered, the names only have to be so. 

X Etenim forma naturae alicujus talis est, ut ea posita, natura data infallibi- 
liter sequatur. Itaque adest purpetud, quando natura ilia adest, atque earn 
universaliter affirmat, atque inest omni. Eadem forma talis est, ut ea amota, 
natura data infallibiliter fugiat. Itaque abest perpetuo, quando natura ilia 
abest, earn que pertuo abnegat, atque inest soli. Nov. Org. Lib II. iv. 

§ Omnino sequetur ut non recipiatur alique natura pro vera forma, nisi per- 


344 


OF THE NATURE OF STOCK. 


This difference, indeed, between common practical observa- 
tions and rules, and general scientific principles must always exist, 
for it springs from the different nature of the one and the other. 
The observations which the man of practice makes, as has been 
already remarked, are on phenomena, the results of the play of 
real principles, and as these principles may vary in their propor- 
tions to each other, and in the modes in which their powers are 
exerted, the results produced by their action must occasionally 
vary. The principles, themselves, however, never vary ; and, 
therefore, one observation or experiment concerning a real prin- 
ciple, if there be no inaccuracy in it, has always in science been 
esteemed as good as a thousand. The whole inductive philoso- 
phy may, indeed, be said to rest on the impossibility of the 
occurrence of exceptions to real laws. Hence the extensive use 
of negative instances , determining, at last, what is a principle 
by pointing out what it is not. 

Again; it is far from being the case, that a regard for self- 
interest, a desire of bettering one’s condition, prompts always to a 
course of action leading to an increase of even private fortune. 
This must depend on what is esteemed the best condition, — on 
what one’s happiness rests, f Hence what has been regarded as 
the most enlightened self-interest, has often led, as we have seen, 
to a course of action the very reverse. The Romans, under the 
emperors, were assuredly as earnest in their quest after happi- 
ness, as were ever any race, yet their manners, and their whole 
practical morality tended to the diminution of wealth previously 
accumulated, and they swallowed up, in extravagant dissipation, 
the riches of kingdoms. Nor let it be here answered, that facts 
applicable to the Romans, or other people of habits and modes 
of thinking and acting unlike those characterizing the civilized 
world of modern days, cannot be fairly adduced in investigations 
concerning existing systems of society. This is indeed true, if 
the reasonings in the Wealth of Nations be admitted to be of the 
systematic and explanatory cast, but not if that work he main- 
tained to be an inductive inquiry. These remote and hetero- 
geneous instances, are the very ones which experimental science 


petuo decrescat quando natura ipsa descrescit, et similiter perpetuo augeatur 
quando natura ipsa augetur. Nov. Org. Lib. II. xiii. 

t Le desir d’ameliorer son sort — le desir d’etre heureux. Storch, vol. I. 
p. 44, 45. 


OF THE NATURE OF STOCK. 


345 


most prizes,* and this, for the reason just adduced, that real prin- 
ciples being constant in their action, what are, and what are not 
the principles inquired after, are thus tested. f 

III. The actual history of what is termed the science of politi- 
cal economy, is another mode of ascertaining the justice of its 
pretensions to that appellation. By comparing it with the 
generic character of the history of philosophical sects of the ex- 
planatory and systematic form, given by the founder of the induc- 
tive philosophy, as contrasted with what he pointed out was to 
be expected from that philosophy, and time has shown it has 
accomplished, we might have farther grounds to come to a con- 
clusion on the question. To do this at length, however, would 
lead us too far beyond limits, which I have already exceeded. I 
shall, therefore, confine the few farther observations I have to 
make, to one circumstance, which Lord Bacon gives as charac- 
teristic of the two sects. In his figurative language “ the path 
which the inductive philosophy takes, is at first steep and diffi- 
cult, but leads to an open country, while that adopted by 
the explanatory and systematic, though at first easy and invit- 
ing, is at last lost in deserts or conducts to precipices.” if 
The doubts and difficulties in which the progress .of those has 
been involved, who have advanced farthest along the apparently 
safe and easy road that Adam Smith seemed to have opened up, 
indicate it not to be the path of science. Of these I shall adduce 
a few instances. 

Capital is uniformly treated of in the Wealth of Nations, as a 
thing homogeneous in its nature, having always the same quali- 
ties, (according to the definition of Mr. Say, an amount of values,) 
and any increase or diminution of it, as a mere alteration in 
quantity. This being taken to be the case, as like causes pro- 
duce like effects, it seems very evidently to follow, that the only 
manner in which a change can be produced in the returns yielded 
by it, must be by the labor that it employs, absorbing a larger or 
smaller part of them. This result is not uniformly kept in view 

* Nemo enim rei alicujus naturam in ipsa re,recte aut feliciter perscrutatur. 
Nov. Or g. Praef. 

Instantias remotas et heterogeneas, per quas axiomata, tanquam igne pro- 
bantur. Ibid, Lib. I. xlvii. 

t Note K. 

f « Via altera ab initio ardua et difficilis, desinet in apertum ; altera primo 

intuitu expedita et proclivis, ducat in avia et prsecipitia.” 

44 


346 


OF THE NATURE OF STOCK. 


in the Wealth of Nations, though it is very frequently brought 
forward. We are often told, that, as the wages of labor fall? 
profits rise, and as profits fall the wages of labor rise, but other 
causes besides the proportion of its returns paid to the laborer, are 
conceived to operate on it. Thus a simple increase in its quantity 
is assigned, in one part of the work, as sufficient of itself to occa- 
sion a fall in profits. “ When the stocks of many rich merchants 
are turned into the same trade, their mutual competition naturally 
tends to lower its profit ; and when there is a like increase of 
stock in all the different trades carried on in the same society, 
the same competition must produce the same effect in all.” Mr. 
Ricardo has, however, pointed out, from Adam Smith’s own prin- 
ciples, that no such effect would ensue, and insists on it as a 
general principle that wages alone vary profit. Profits, according 
to him, are increased or diminished, exactly as the maintenance of 
labor is easy or difficult, from fertile land being abundant or 
scarce. Admitting the popular- notion of capital, that serves as 
the basis of Adam Smith’s reasonings, to be of a sort on which 
true science may be built, the theory of Mr. Ricardo seems to 
me hard to be controverted, and has certainly the merit of giving 
uniformity and regularity to the system. It has accordingly been 
acquiesced in very generally in Britain, by men who are given 
to this department of inquiry, and has been adopted and defended 
by many writers of unquestioned ability. Nevertheless, it may 
well be doubted, if it has added to the general confidence in the 
science. The conclusions to which it leads have in them some- 
thing so extraordinary, as to exceed the strength of any common 
measure of faith in such abstractions. 

Thus, according to the principles of this school, no extension 
of foreign trade, however advantageous, and no improvement in 
domestic industry, however great, can, in the least, increase pro- 
fits. On the other hand, no diminution of foreign trade can, of 
itself, lessen profits. It follows also, from the same principles, 
that colonies give no commercial advantages to the mother 
country, and, therefore, that being in general expensive, they 
ought to be shaken off as a burden on her resources. Sir Henry 
Parnell observes, and quotes Mr. Mills in his support, that, 
“The capital which supplies commodities for the colonies would 
still prepare commodities if the colonies ceased to purchase them ; 
and those commodities would find consumers, for every country 
contains within itself a market for all it can produce. There is, 


OF THE NATURE OF STOCK. 


347 


therefore, no advantage derived under freedom of competition, 
from that part of the trade with a colony, which consists in sup- 
plying it with goods, since no more is gained by it than such 
ordinary profits of stock as would be gained if no such trade 
existed.” 

These, and similar doctrines, have something in them so 
strange, so contrary to experience, and seem so paradoxical, that 
they have in most people rather the effect of exciting surprise, 
than producing belief. They are exceeded, however, by what 
a writer in the Edinburgh Review has proved, and in my opinion 
satisfactorily proved, from the principles of his school, concern- 
ing the effect of Irish absenteeism. He shows that it can have 
no disadvantageous, and possibly may have an advantageous 
effect, that it can only cause capital to pass from one employ- 
ment to another, possibly from a less, to a more advantageous 
employment. That, as it is the capital of the artisan, the trades- 
man, and shop-keeper, that yields them their revenue, were all 
their customers annihilated, they would still live equally well on 
their capitals. That so, were all the landlords in Ireland to 
leave it, and were their rents to be sent them, to a distant king- 
dom, in the shape either of cash or agricultural produce, it could 
not possibly be of any detriment to the country they abandoned. 

Though the argument is skilfully conducted, and though it is 
in perfect accordance with the leading principles of the science — 
for, if capitalists are dependent on their customers, what becomes 
of the all-sufficiency of capital? — and, if the British government 
could advantage Ireland by taxing absentees, what becomes of 
the principle of non-interference ? — yet there are perhaps few 
people, on whom it has had the effect the author probably 
desired. It has the disadvantage of proving too much. When it 
is shown, that, according to received principles, two large classes 
so intimately dependent on each other, as are the landlords of a 
great country, and the mechanics and capitalists that they em- 
ploy, can be completely severed, without injuriously affecting 
the whole system of things in the society, we are rather inclined 
to doubt of the principles, than to acquiesce in the conclusion. 
However skilfully the argumept may be urged, or however 
closely one part of it may seem joined to another, it has rather 
the effect of inducing skepticism than conviction. We still figure 
to ourselves that there is a loss to Ireland, a gain to some other 


348 


OF THE NATURE OF STOCK. 


place. We cannot get rid of the imagination, that, if the land- 
lords were all to go in a body, for instance, to Brussels, and 
spend their rents there, they would give profitable employment, 
in some way or other, to a vast number of laborers, tradesmen, 
and artificers, and that the population and wealth of that town 
would be largely augmented, that of Ireland proportionally dimin- 
ished. 

These, and many such like instances, seem to us contrary to 
the usual progress of real knowledge. The experience of what 
true science is, has accustomed us to expect that in this, as in 
other branches of inquiry, the farther we advance the larger and 
larger a compass of undeniable facts should present themselves, 
that we should be able more and more evidently to connect phe- 
nomena, that seemed at first disjointed and isolated, and that, 
the indistinctness of distance being removed, truth should stand 
clearly before us. Deceived in our anticipations, we feel like 
travellers who find the straight and well-beaten path on which they 
entered, becoming more devious and faint the farther they jour- 
ney, leaving the habitations of men, and leading to barren and 
dangerous wastes. Though we can trace no error, we begin to 
suspect that there is one, and that somehow or other, we have 
taken the wrong direction. 

Dugald Stewart has a remark on the abstract philosophy of 
David Hume, that seems not inapplicable to this, so termed, 
abstract science. It is well known, that that skeptical philoso- 
pher deduced, pretty clearly, from Mr. Lock’s principles, that 
the human mind was a mere bundle of sensations. The profes- 
sor observes, that, before any formal refutation of the doctrine 
appeared, it might have been sufficient answer to it, that it was 
so contrary to the experience of every one, as to make it more 
reasonable to suppose an error, either in the premises or deduc- 
tion, though that error might not be discoverable, than to believe 
that the metaphysicians were right, all the rest of mankind 
wrong. Such an answer is, I suspect, that which is now present 
to the minds of very many, in regard to the strange dogmas of 
the prevailing school of political enonomy. They regard them 
as a sort of practical demonstratio ad absurdum of some funda- 
mental fallacy in the science. 

Reasoning from Adam Smith’s principles, his followers, in 
more than one instance, have arrived at conclusions differing 


OF THE NATURE OF STOCK. 


349 


considerably from his. He looked on parsimony as the great 
generator of wealth ; they rather hold an opinion similar to that 
of Mandeville, that to consume largely is an essential part of the 
process, consumption and reproduction being represented by them 
as the two springs, by the rapid play of which the general pros- 
perity is advanced. The doctrine, as it has been maintained, 
has the advantage or disadvantage of being somewhat paradoxical ; 
but omitting the consideration of this circumstance, it is worth 
while to examine whether or not, when applied to practice, it 
has brought about the anticipated results. Of the many instances 
that might be produced of events of this class turning out con- 
trary to the predictions of the votaries of the science, I select one 
from the “ Cours d’Economie Politique ” of Mr. Storch, a work 
which, according to Mr. Macculloch, stands at the head of all 
those on Political Economy ever imported from the continent 
into England. 

That author brings forward Ireland, as an example of great 
prosperity, and very rapid progress in wealth, in consequence of 
that nation following the rules of the system. “ The sudden and 
prodigious increase,” he observes, “ which took place in the 
consumption of spirituous liquors, sugar and tea, soon after the 
union, is the more remarkable, from its having occurred at a time 
when these commodities were charged with additional duties, 
that in any other country would have been equivalent to an 
absolute prohibition. 

“ To date from the union, the consumption of wine has aug- 
mented by half ; and yet the consumers, to buy half more than 
they formerly did, are obliged to pay three times the price. As 
for rum, and other foreign spirits, although the duties have been 
doubled, the consumption has increased eightfold. 

“ The importation of tea has risen, since the union, from 2,260,- 
600 pounds to 3,706,771. The amount of sugar purchased has 
risen from 211,209 hundred weight to 447,404, so that Ireland 
consumes more of that nourishing, agreeable, and healthy com- 
modity, than both Russia and France conjoined. In short, an 
examination of the table of importations of Ireland shows that, 
with the exception of a small number of articles, the additional 
consumption of those commodities, the production of other 
countries, of which the increasing demand most marks the grow- 
ing riches of a people, has equalled, or rather surpassed the 


350 


OF THE NATURE OF STOCK. 


whole consumption before the union. The facts which we 
have thus analyzed,” he continues, “ present a statistical picture 
altogether singular, and such as the most flourishing colonies 
have never furnished. It is true that, by this prodigious increase 
of importations, the purchases of the people of Ireland have in- 
creased in a greater ratio than their sales ; but this circumstance, 
which would spread alarm among most other nations, is regarded 
in Great Britain as a symptom of prosperity, I know nothing 
more calculated to show how much those continental govern- 
ments are deceived, who see only objects of alarm in observing 
the increase of importations. * They send the money out of the 
country , they favor foreign industry at the prejudice of domestic, 
and ruin the inhabitants by exciting them to expenses beyond 
their incomes.’ Such is the cry of these alarmists. Perhaps I 
return too frequently to a consideration of such errors ; but they 
are so common, and, at the same time, so injurious, that I think 
it my duty to neglect no opportunity to prove their fallacy, 
whether by arguments or by examples ; and what more striking 
example could 1 oppose to this doctrine than that of the pros- 
perity of the Irish ?” 

Speaking of the probability of a rise in the price of colonial 
productions, he observes farther, “ that it may possibly diminish 
their consumption, but that it is much more likely that the Irish, 
who have acquired a taste for such enjoyments, will work still 
harder, and produce still more linen, hemp, and oats, that they 
may have plenty of sugar and rum. With a people so ingenious, 
all that is requisite is to give them w r ants, and excite them to 
labor.” * 

Science is said to be prophetic ; does this then sound like her 
voice ? 

I shall conclude these remarks, by observing, that in my opinion 
the disciples and followers of Adam Smith, in claiming for the 
speculations contained in the Wealth of Nations, and for the 
doctrines they have founded on them, the rank of an experimental 
science, the conclusions of which are entitled to the same cre- 
dence with other experimental sciences, act injudiciously, and by 
insisting on pretensions which are unfounded, injure the cause of 
that philosopher and conceal his real merits. If we view his 
philosophical system of the Wealth of Nations, or indeed any of 


Vol. IV. p. 266. 


OF THE NATURE OF STOCK. 


351 


his philosophical systems, as he views every such system, “ as 
an imaginary machine invented to connect together in the fancy 
those different movements and effects which are already in reality 
performed,” nothing of the sort can be more beautiful. A clear, 
orderly and extensive view is given of a vast number of interest- 
ing and important facts, connected by a few familiar principles. 
A great body of knowledge is thus brought before the mind in a 
shape which it can readily grasp, and easily command. The 
object being not to discover, but to arrange and methodize, all 
the subordinate principles of the system are artfully bent so as to 
embrace the phenomena, and care is taken that the imagination 
be not shocked by a view of matters that shall seem irreconcila- 
ble to the aspect of affairs which the contemplation of the world 
of life itself presents. Nor is it to be disputed that a general 
system of the sort, besides the pleasure and the advantage de- 
rived from it, is likely to be nearer the truth than speculations of 
the same nature, confined to particular parts. 

The case, however, is completely altered, when the loose and 
popular principles on which such a system proceeds, are adopted 
as demonstrative axioms, the discoveries of real science, and are 
carried out to their extreme consequences. Their original pur- 
pose is then altogether changed, and instead of serving to bring 
before the mind a collection of facts, they lead it farther and far- 
ther away from truth and reality, into the barren and weari- 
some regions of mere verbal abstractions. 


APPENDIX TO BOOK II. 


Of the Principle of the Division of Labor . 

Not having been able without interrupting the course of inves- 
tigation, to enter into a discussion of the principle of the division 
of labor, as viewed by Adam Smith, I have thought it better 
to place apart the observations I have to make on it. 

In the Wealth of Nations, the division of labor is considered 
the great generator of invention and improvement, and so of 
the accumulation of capital. In the view I have given it is 
represented as proceeding from the antecedent progress of inven- 
tion, and increase of stock, and as operating chiefly by quicken- 
ing the exhaustion of instruments, and so placing them in orders 
of more speedy return. Now in reality, as far as its origin is 
concerned, the account of the matter which we find in the Wealth 
of Nations, is more favorable to the latter supposition, than to 
the former. 

“ In a tribe of hunters, or shepherds, a particular person makes 
bows and arrows, for example, with more readiness and dexterity 
than any other. He frequently exchanges them for cattle or for 
venison, with his companions ; and he finds at last that he can 
in this manner get more cattle and venison, than if he himself 
went to the field to catch them. From a regard to his own 
interest, therefore, the making of bows and arrows grows to be 
his chief business, and he becomes a sort of armorer. Another 
excels in making the frames and covers of their little huts or 
moveable houses. He is accustomed to be of use in this way to 
his neighbors, who reward him in the same manner with cattle 
and with venison, till at last he finds it his interest to dedicate 
himself entirely to this employment, and to become a sort of 


OF THE NATURE OF STOCK. 


353 


house carpenter. In the same manner a third becomes a smith 
or a brazier; a fourth a tanner or dresser of hides or skins, the 
principal part of the clothing of savages.” 

If this be a true account of matters, it is evident, that it is the 
antecedent progress of invention, and the existence of the several 
arts of the bow-maker, the hunter, the carpenter, the brazier that 
is the real cause of the separation of the members of the society 
into artists of different sorts. I rather think, however, that it will 
be found, that separate artists have come to exist from the passage 
of individuals from one community to another, and their carrying 
with them the arts proper to each. If, for example, in any par- 
ticular tribe, the art of reducing from the ore and working up 
some of the metals, were well known, and were chance to throw 
a member of it among another tribe ignorant of this art, he might 
come to employ himself altogether in the smelting and giving 
form to metal, and there might come to be a class, whose chief 
employment were that of working in metal. But it is of little 
consequence how the separation of employments was brought 
about. The real question is, do the acknowledged advantages of 
it proceed directly from the increased efficiency of the labor of 
the workman ; or from the stock of instruments of the society 
being thus in much more constant employment, and its being, 
therefore, in the power of the accumulative principle to give 
them a much more effective construction. 

The efficiency of the labor of the workman may be advanced, 
either by his dexterity being increased, or by an improvement 
in the construction of the implements with which he works. 

I. As concerns his dexterity, it is to be noted that it is chiefly 
in the beginning of art that great manual dexterity is requisite. 
Then the hand is the great instrument. The manual dexterity 
of the savage in hurling his dart, or shooting with his bow and 
arrow, in guiding his canoe by the pole or paddle, in framing his 
fishing and hunting apparatus with the rude tools he possesses, 
far exceeds that necessary to the civilized man, not only in the 
common, but even in the more delicate arts of civilized life; and, 
were we to take into the account things generally confounded 
with manual dexterity, quickness and accuracy of sight, and 
delicacy and flexibility of the other organs, the disparity between 
the two would be much greater. As art advances from its first 
rude elements, the hand does less, the instrument more. To 
45 


354 


OF THE NATURE OF STOCK. 


acquire the manual dexterity necessary to guide a bark canoe 
with rapidity and speed, requires the practice of years. To row 
a boat equally well might be learned in a few months. The 
mere manual dexterity necessary to move the different pieces of 
mechanism that govern the motion of a steam-boat, might be 
acquired in a few days or hours. 

It may be remarked, that the examples of this dexterity ad- 
duced in the Wealth of Nations, are from arts where the imple- 
ments are exceedingly simple, and where, of consequence, the 
hand is the great operator. Were improvements taking place in 
the art of pin-making, or nail-making, that would be done by the 
instrument which is now done by the quick and complex motions 
of the hand. In fact, in the arts in which the greatest improve- 
ments have had place, such as in the cotton manufacture, the 
mere manual dexterity requisite is very easily acquired. In a 
few weeks, or months, the limit is attained. But, when the 
manual dexterity requisite .for the practice of any art can be 
attained in so short a time, it cannot matter much to the society 
or to the individual, whether the workman have to learn one or 
several arts. Besides, the acquisition of any difficult art very 
much facilitates the attainment of any other. The great matter 
is to get, as a workman expresses it, the use of one’s hands. To 
become familiar, that is to say, with handling matters of various 
sorts, judging of their forms and qualities, and acquiring the power 
of determining the movement to be given, and the habit of exe- 
cuting it quickly and accurately. When this is acquired, there 
is no great difficulty in the management of any common tool, if 
once the principle on which it operates be understood. Hence 
a good workman in any trade, displays comparatively but trifling 
awkwardness in applying himself to any other. Almost all he 
requires is to know how a thing is done, and to understand how 
the implements employed operate. This is very observable in 
the progress of new settlements in America, where I have seldom 
seen a good mechanic have much difficulty in turning his hand, 
as it is said, to any thing. 

Agriculture, from its nature, is the art in which the division of 
labor has made least progress. Were it possible to conceive 
that, by the operation of any circumstance, it could there be carried 
to its full extent, whether would its benefits be felt in the increased 
dexterity of the workman, or in the increased efficiency of the 


OF THE NATURE OF STOCK. 


355 


instruments employed ? At present a man employed in such work, 
generally, ploughs, harrows, reaps, mows, threshes, and drives 
as well at twenty-five, as at thirty-five, or forty-five. It seems 
not very probable, therefore, that, were he to confine himself 
altogether to one of these occupations, he would perform it better 
than he now does. On the other hand, it seems very likely, that, 
did the dependence of the several agricultural operations on the 
seasons permit the separation of occupations in this art, the im- 
plements employed in it would soon become much more efficient. 
We see, in fact, that it is the impossibility of this separation taking 
place, that does here retard or prevent improvement. Thresh- 
ing-mills, for example, would be universally adopted, were it not 
that, being nearly idle great part of the time, the cost of con- 
struction is too great for the return. The machine is probably 
unemployed for nineteen days out of twenty, so that could this 
division take place in twenty adjoining farms, each of which has 
now its own threshing-mill, nineteen of those at present necessary 
might be dispensed with. The same thing may, I believe, be 
said concerning drilling-machines ; it is their cost and the long 
time they lie idle, that prevents their general adoption. Similar 
causes altogether prevent the introduction of many other ingen- 
ious machines and implements. As much ingenuity, indeed, has 
been displayed in contrivances for the purposes of this art, as 
for any other, but the instruments produced, though they would 
have been very effective aids in particular operations, have never 
come into use, because, unless for a few days every year, they 
would have lain idle on the hands of their owners. Were it pos- 
sible for farmers to divide their employment, and, each taking 
to a particular department, were the distinct occupations of 
ploughers, reapers, harrowers, &c. to arise, none of the instru- 
ments employed lying idle, they would yield much more speedy 
returns ; their construction, in all probability, would greatly 
improve, and the whole capital of the country would soon 
be very much increased. It is worth while observing, too, 
that in this sort of labor, the improved construction of instru- 
ments seems to lessen the quantum of manual dexterity necessary. 
The manual dexterity necessary for managing a threshing or a 
drilling-machine is very trifling. 

It is chiefly in some very delicate arts, such as that of watch- 
making, or in some in which, from their nature, the use of tools 


356 


OF THE NATURE OF STOCK. 


cannot be extensively introduced, as in printing, that the efficiency 
derived from long practice is very great, and where, consequently, 
the division of labor would seem in this way a direct improvement. 
These, however make but a small part of the arts of any com- 
munity. 

2. Among the direct advantages derived from the division of 
labor, Adam Smith reckons the invention of many machines 
facilitating and abridging labor. It seems to me, that the facts 
are, on the whole, opposed to this idea. Whatever confines a 
man’s faculties to one monotonous occupation, must rather dull 
and cramp, than quicken and expand them. “ The understand- 
ings of the greater part of men, are necessarily formed by their 
ordinary employments. The man, whose whole life is spent in 
performing a few operations, of which the effects, too, are per- 
haps always the same, or very nearly the same, has no occa- 
sion to exert his understanding, or to exercise his invention, in 
finding out expedients for removing difficulties which never occur. 
He naturally loses, therefore, the habit of such exertion, and 
generally becomes as stupid and ignorant as it is possible for a 
human creature to become. The torpor of his mind renders him 
not only incapable of relishing or bearing a part in any rational 
conversation, but of conceiving any generous, noble, or tender 
sentiment, and consequently of forming any just judgment con- 
cerning many even of the ordinary duties of private life. Of 
the great and extensive interests of his country he is altogether 
incapable of judging ; and unless very particular pains have been 
taken to render him otherwise, he is equally incapable of de- 
fending his country in war. The uniformity of his stationary life 
naturally corrupts the courage of his mind, and makes him regard, 
with abhorrence, the irregular, uncertain, and adventurous life of 
a soldier. It corrupts even the activity of his body, and renders 
him incapable of exerting his strength with vigor and perseverance 
in any other employment than that to which he has been bred. 
His dexterity in his particular trade seems, in this manner, to 
be acquired at the expense of his intellectual, social, and martial 
virtues.” * 

These being the direct effects on the intellectual and moral 
powers of the division of labor, it can scarcely be said to be the 
direct cause of invention in the artisan. The extended division 
* Wealth of Nations, Book V. c. I. 


OF THE NATURE OF STOCK. 


357 


of labor implies the existence of many arts, and of much intelli- 
gence. Where it exists, therefore, the inventive faculties will 
be generally active. But this activity, though a concomitant of 
the division of labor, is to be held as an effect, not of that divi- 
sion, but other causes themselves producing the division of labor. 
It will appear, in short, to be, like most popular principles, a 
result, not a cause ; and ranks properly, not as a prime mover in 
the course of human affairs, but as a consequence of the actions 
of the prime movers. 














* 




BOOK III. 


OF THE OPERATIONS OF THE LEGISLATOR ON NATIONAL STOCK. 


INTRODUCTION. 

When men unite in large societies, they cannot each take an 
active part in what concerns the common good. They are 
obliged to delegate their individual powers and rights to act, in 
things relating to it, to several, or to one. This body of men, 
or this man, acting and making laws for the supposed advantage 
of the whole, may properly be termed the legislator. It is, there- 
fore, the capacities and powers of the whole, as far as they make 
one, turned to this sphere of action, and designated by this term, 
that we have now to consider. 

“ Man is generally considered by statesmen and projectors, as 
the materials of a sort of political mechanics. Projectors disturb 
nature in the course of her operations on human affairs ; and it 
requires no more than to let her alone and give her fair play in 
the pursuit of her ends, that she may establish her own designs.” 
“ Little else is requisite to carry a state to the highest degree of 
opulence from the lowest barbarism but peace, easy taxes, and a 
tolerable administration of justice; all the rest being brought 
about by the natural course of things. All governments which 
thwart this natural course, which force things into another chan- 
nel, or which endeavor to arrest the progress of society at a par- 
ticular point, are unnatural, and to support themselves are obliged 
to be oppressive and tyrannical.” * 

The principle here set forth by Adam Smith, though not for- 
mally announced in the Wealth of Nations, runs, nevertheless, 
through the whole work, and in its particular application to this 
science, forms the most important of the conclusions to which 
his reasonings tend. It is very frequently, also, expressly brought 
forward by the supporters of his opinions, as an argument against 
the interference of the legislator, and of all those they employ, 

* Account of the Life and Writings of Dr. Smith, by Dugald Stewart, p. 




OF THE OPERATIONS OF THE LEGISLATOR, &c. 359 

none perhaps, is more popular, or has had greater influence in 
giving currency to the system. A brief examination of its merit 
may not, then, form an improper introduction to the particular 
subject of this book. 

In strict philosophical accuracy, the whole of every political 
system is certainly natural. Every political system must be 
allowed to have proceeded from the operation through long ex- 
tended time, of the things without, and the things within man, 
acting as the pow r ers and principles which nature has given them, 
cause them to act. Every such system has many parts, but 
they all belong to a great whole, and from their action and 
reaction on each other the movements of that whole proceed. 
It seems not, therefore, to me, that we can take any of those 
parts separate from the others, and with propriety say, that it 
acts in opposition to the designs of nature, for that cannot well 
be said to be in opposition to the designs of nature, or to thwart 
her operations, which proceeds from principles that she herself 
has established. Least of all can statesmen be taken separate 
from the rest of the frame of society, and the actions they gener- 
ate considered as unnatural, or operating contrary to the order of 
things which nature has established, for, to speak in the general, 
they are all moulded after the form and character of their time 
and nation, and instead of giving laws to the age, must rather be 
regarded by the philosopher as emanations of its genius, and 
organs by which its voice is uttered. Were the whole present 
race of politicians swept from the earth, so little essential differ- 
ence would there be between them and their successors, that the 
change hence resulting to human affairs could not, probably, 
be traced a century afterwards. Napoleon, when speaking on 
this subject to one of his generals, is somewhere reported to 
have expressed himself in nearly the following terms. “We are 
apt to think that we have done much more than we really have. 
It is the march of events that has made us, and makes us, what 
we are. Had you and I never existed, our places would have 
been held by others, and were we now to cease to exist, the 
blank would be so filled as not to be perceptible : ” It must be 
allowed that this was with justice said of himself, even by such 
a man. Already we perceive that all the apparently mighty 
changes, referable to his personal agency, were rather undulations 
on the surface of the tide of human affairs, than alterations in its 
course. 

When we speak of the course of the operations of nature on 
human affairs, philosophical accuracy would, I think, imply a 
reference to the whole course, and all the springs and principles, 
that actuate and guide it. These springs and principles, discord- 
ant and jarring as they may appear, may, nevertheless, have 
been so adjusted by the hand of nature, as to have a tendency 


360 0F THE OPERATIONS OF THE LEGISLATOR 

gradually to bring the whole system nearer and nearer perfection 
and happiness, 

“ From seeming evil still educing good, 

And better thence again, and better still, 

In infinite progression. 

This is a pleasing and no improbable theory, but, in this view of 
the subject, it is the tendency of the whole of these springs and 
principles that we have to consider, not some taken apart from 
others. Indeed, if we reason analogically, concerning the appar- 
ent action of these different springs and principles, so far from its 
appearing probable that the direct interference of the legislator 
in endeavoring to give an advantageous direction to the course 
of the national industry, in its efforts after the production of 
wealth, is a principle unlikely to farther that production, the pre- 
sumption rather is, that it will farther it. 

To perceive this, it is necessary particularly to attend to the 
distinction which Adam Smith makes between nature and art as 
applied to the progress of human affairs. When we say, a thing 
is produced by art, we mean, that it is the result of the agency 
of man, designedly directed to its production. When we say, a 
thing is produced by nature ; we mean that it is produced either 
without the agency of man, or, if by his agency, without its being 
his intention to produce that, which he, nevertheless, produces. 
Thus the fruit, which a tree cultivated with care in an orchard 
yields, is an artificial production, that yielded by another growing 
spontaneously in some wild, is a natural production. A path 
between two points marked out by rule and line is artificial. A 
footpath formed by the mere unconstrained passing of many peo- 
ple from one point to another, is natural, because, though equally 
with the former the work of man, it is not designedly formed by 
him. In this case it was his intention merely to pass from place 
to place, not to form a path by so passing. It is in this latter 
sense, that the production of national wealth is said to be the 
work of nature. It is said to be the intention of each individual 
in a nation, to advance merely his own wealth, and the tendency 
which the actions of all the individuals in a nation have to ad- 
vance the sum of the national opulence, as it is said to make no 
part of their motives to action, is esteemed a work of nature, in 
the same manner as we may esteem a footpath, formed by the 
continual passing of people over some moor or heath, to be the 
work of nature. According to this view of the subject, it is the 
legislator alone, who can, of design, act with the view to advance 
the national opulence. It is held, however, that as this inter- 
ference of the legislator disturbs the course which events would 
otherwise have taken, it acts in opposition to the course of nature, 
and, therefore, that the presumption is that it will be injurious. 
On the contrary, I hold, that a just analogy would rather lead us 
to infer that it will be beneficial. 


ON NATIONAL STOCK. 


361 


It must be acknowledged that when man acts most success- 
fully, it is thus that he does act. He never, indeed, seeks to 
conquer nature otherwise than by obeying her, but his aim, 
nevertheless, always is to conquer her. By observing the order 
of events, he acquires the power of changing that order. He 
does so, by that which distinguishes him from other animals, the 
reasoning faculty, which so directed we term art, and without 
the aid of which so directed, we scarce attain any object. 

But though art and nature are thus put in opposition to each 
other, the form of expression is more popular than correct. 
Were the changes which man every where produces on the 
course of events, contrary to the designs of nature, we may rest 
satisfied that she would not have given him powers sufficient to 
effect them. What we call a conquering or governing of nature, 
is to be held, in a more enlarged and truer sense, an acting in obe- 
dience to her designs, and man as a reasoning animal is rather to 
be considered as an instrument in her hands, through which she 
effects much of that change in the order of events, and conse- 
quent progress from good to better, that we may fairly hope is 
going on, than as a separate agent acting in opposition to her. 
In this sense, all art may be said to be nature, as in another 
sense all nature may be said to be art. 

Is it then a thing to be assumed, a priori, as next to demon- 
strable, that art, the art of the legislator, cannot operate so as to 
advance the prosperity of nations? That, of all the springs and 
principles actuating the movement of societies, it is the only one 
powerless to do good, or whose power can no otherwise be advan- 
tageously exerted than in checking its own propensity to act? 
That though in every other department of human action it is 
called on to lead, yet here it must impose chains on itself and sit 
still ? That though every where else nature willingly submits 
herself to its government, nay, seems to court it, yet here she 
commands it to rest a mere spectator, beholding her “ working 
out her own ends in her own way ? ” 

The presumption, it seems to me, would rather be, that, 
though neither here nor elsewhere can man in wisdom oppose 
nature, yet here, as elsewhere, he is called on to direct her oper- 
ations. That the result of a successful inquiry into the nature of 
wealth, would terminate in affording the means of exposing the 
errors that legislators had committed from not attending to all 
the circumstances connected with the growth of that wealth, 
whose progress it had been their aim to advance, and would so 
teach them, not that they ought to remain inactive, but how they 
may act safely, and advantageously ; and that thus, it would 
maintain the analogy running through the whole of man’s con- 
nexion with the trains of events going on about him, the course 
of which he governs by ascertaining exactly what it is. That 


362 OF THE OPERATIONS OF THE LEGISLATOR, <fcc, 

here, as elsewhere, his advance in knowledge would show him 
his power, not his impotence. 

According to the view of the nature of stock, and of the 
causes generating and adding to it, which has been given in the 
preceding book, it would seem that its increase is advanced : 

I. By whatever promotes the general intelligence and morality 
of the society ; and that, consequently, the moral and intellectual 
education of the people makes an important element in its pro- 
gress : 

II. By whatever promotes invention ; 

1. By advancing the progress of science and art within the 
community ; 

2. By the transfer from other communities of the sciences and 
arts there generated : 

III. By whatever prevents the dissipation in luxury, of any 
portion of the funds of the community. 

A full investigation of the modes in which the legislator may pro- 
mote the increase of the stock of the community, would compre- 
hend an examination of the manner in which he may operate in 
these several particulars, of the rules necessary for him to observe 
in each case, and an enumeration of instances, in which, according 
as his efforts have been judiciously or injudiciously exerted, he 
has succeeded or failed in his enterprises. 

But an investigation of all these particulars would extend far 
beyond the bounds which I have prescribed myself. I purpose, 
therefore, to confine myself to two of them, and to limit the sub- 
ject of this book to show that the legislator may operate with 
advantage to the community, 1st. in the transfer of foreign arts 
to his own country ; 2d, in applying to useful purposes funds 
which would otherwise be dissipated in luxury. 


CHAPTER I. 


OF THE OPERATIONS OF THE LEGISLATOR IN BRINGING THE ARTS OF 
FOREIGN COUNTRIES TO HIS OWN. 

When we examine the arts practised by the members of any 
of the numerous societies, among whom the surface of the earth 
is divided, we find that there are very few which have arisen 
among themselves. Unless in some rare instances, they have 
been all brought from abroad. Inventions appearing at various 
points in their rude elementary state, have gradually spread 
themselves far and wide, and, as they have spread, have im- 
proved. These passages from place to place, seem to have been 
generally brought about by violent causes — by wars, internal 
disturbances, and revolutions.* But, as society assumes a more 
settled form, it is to be hoped that reason will rise superior to 
force, and that changes produced by violence will diminish ; that 
wars and tumults will become less frequent, or will altogether 
cease, and that thus a great portion of the evils which have 
afflicted humanity will be removed. But if the direct evils 
brought about by the reign of violence, be removed by the 
ascendency of reason over passion, must the indirect good also 
produced by it be abandoned ? or, is it not the place of the 
intellectual part of our nature, watching in this, as in other 
instances, the progress of events, so to influence that progress, 
as that the good may be brought to pass, the evil prevented? 

The answer to these questions is, I conceive, too obvious to re- 
quire a formal enunciation. If this be the case, it would not seem 
necessary to recommence a discussion concerning the apparent 
propriety of assistance being in many instances given by the 
legislator to the passage of the useful arts from country to country. 

* See Book I. c. ii. and Book II. c. x. and xiii. 


364 0F THE OPERATIONS OF THE LEGISLATOR 

This, as a general practical conclusion, must be granted. The 
question again resolves itself into particulars, and the investiga- 
tions of the political economist, would seem to be confined to 
the tracing out, from the principles of his science, rules determin- 
ing when the passage of any art is practicable, and when the 
benefits derived from it will exceed, or fall short of the necessary 
expense of effecting the passage. It is not my intention to 
attempt a full discussion of these various particulars. It will be 
sufficient for the object in view, to enumerate the general advan- 
tages which such transfers produce, and to state some of the 
chief circumstances favorable, and some of the others adverse to 
their success. 

When these measures are completely successful, that is, when 
the commodity, the product of the art in question, comes to be 
made at the same cost in the country to which its manufacture is 
transferred, as in that from which it comes, or at less cost than 
there, the advantages which the community derives from them 
are various, but, as concerns commodities, not luxuries, may be 
reduced to three heads. 

1. The saving of the expense of transport of the foreign com- 
modity. This, as has been already noticed, is often very great.* 
It may be remarked, too, that some articles are so perishable, or 
so difficult of transport, that they cannot enter into the system of 
exchange of two societies. They are produced, or may very 
easily be produced in the progress of the construction and ex- 
haustion of other instruments, but from its being found very diffi- 
cult or impracticable to transport them to places where they 
might be exchanged for valuable commodities, they want the 
whole, or a great part of the utility they would there possess. 
A farmer, for instance, in the interior of some great agricultural 
country, say North America, has almost always a large mass of 
commodities which are nearly, or altogether, valueless to him. 
Great part of the timber he cuts down he is obliged to burn up 
on the ground, and much of the produce of his orchard, of his 
dairy, and of his poultry yard and garden, is either entirely, or 
in a great measure, lost. No little part of the direct produce of 
the farm, is also lost. His working cattle are idle for weeks or 
months in the course of the year, and any superabundance of the 


Book I. c. ii. 


ON NATIONAL STOCK. 


365 


more bulky articles, such as turnips, potatoes, oats, or hay, lies 
nearly useless on his hands. When a manufacturing village is 
established in his neighborhood, all such productions become 
valuable, and are transferred to the artisan, and master manufac- 
turer, as returns for the products of their art. The pine of the 
forest goes to build their houses, the maple, the birch, and the 
walnut to make furniture for them, all potatoes and other vege- 
tables of the sort, that can be spared, are consumed by them as 
articles of food, the working cattle get employed at all times, 
and there are none of the returns of the industry of the agricul- 
turist, but find a ready market. The advantages hence resulting 
to the parts of the country where the new art fixes itself, may be 
estimated by observing the great rise in the value and rent of 
land which follows it. We have also a good measure of them, 
in the difference between these in the neighborhood of manufac- 
turing towns and villages, and in places distant from them. 

The direct effect, therefore, of these general and partial im- 
provements, is to carry instruments, generally or partially through- 
out the community, to orders of quicker return, and so increase 
the absolute capital of the society. 

2. They have also a large indirect effect in carrying instru- 
ments to orders of quicker return, by stimulating invention, and 
diminishing the propensity to servile imitation.* Every useful 
art is so connected with many, or with all others, that whatever 
renders its products more easily attainable, facilitates the opera- 
tions of a whole circle of arts, and introduces change — the great 
agent in producing improvements — under the most favorable 
form. Thus the recent improvements in the iron manufacture, 
have in Great Britain had no inconsiderable share in effecting the 
general improvement in the mechanical arts which has there 
taken place. Arts, too, as we have seen, when brought together 
pass into one another, and. thus also improvements in old arts 
are produced, or new arts generated. Even their very existence 
in any society gives a powerful stimulus to the ingenuity of its 
members. This has been well noticed by Mr. Hamilton: “To 
cherish and invigorate the activity of the human mind, by multi- 
plying the objects of enterprise, is not among the least consider- 
able of the expedients by which the wealth of a nation may be 


Book II. c. x. 


366 OF THE OPERATIONS OF THE LEGISLATOR 

promoted. Even things in themselves not positively advanta- 
geous, sometimes become so, by their tendency to provoke exer- 
tion. Every new scene which is opened to the busy nature of 
man, to rouse and exert itself, is the addition of a new energy to 
the general stock of effort. 

“ The spirit of enterprise, useful and prolific as it is, must neces- 
sarily be contracted or expanded in proportion to the simplicity 
or variety of the occupations and productions which are to be 
found in a society. It must be less in a nation of mere cultiva- 
tors, than in a nation of cultivators and merchants, less in a 
nation of cultivators and merchants, than in a nation of cultiva- 
tors, artificers, and merchants.” * 

3. The supply of any commodities which one society is in the 
habit of receiving from another and independent society, is liable 
to be suddenly interrupted by wars, or other causes. Hence 
arises great waste of the resources of the community. In many 
cases the whole system of instruments it possesses is at once 
disjointed, and it is long before the society recovers from the 
shock. The deficiency is at last supplied, it may be in a more 
effective manner than before, but in the interim there is great 
waste.f Communities dependent on others for the supply of 
commodities for which they cannot readily find substitutes, must 
necessarily, every now and then, be subjected to great diminu- 
tion of their funds from such causes. There are few expensive 
wars that do not furnish instances of it. It is probable that the 
absolute loss so caused to the present United States, from the 
interruption of their intercourse with Great Britain, at the com- 
mencement of the war of the revolution, equalled the whole ex- 
pense of that war. The loss which many of the continental 
nations experienced from the sudden interruption to the supply 
of British manufactures, during the progress of the war against 
Napoleon, was also excessive. Great Britain herself, on the 
same occasion, suffered very severely from being at once deprived 
of the supply of materials necessary to many branches of her 
industry. Thus the cutting off the supply of Baltic and Norwe- 
gian timber, was for some years very sensibly felt by her. 

It is no doubt true, that, on such occasions, the necessity which 
arises to procure substitutes for the commodities which are defi- 

* Works, vol. I. Report on Manufactures. 

f Book II. c. xiv. 


ON NATIONAL STOCK. 


367 

cient, largely stimulating ingenuity, often ultimately produces 
real benefit. Wars and similar interruptions to intercourse, as 
has been repeatedly observed, are, in fact, one of the chief agents 
by which the arts have been made to pass from country to 
country. But the same benefits might have been produced by 
the gradual operations of the legislator, without the sacrifice in 
this way required, and it is the business of reason, watching 
events, to separate the good from the evil, and to search for 
plans of obtaining the one, and avoiding the other. 

But, while the legislator is called on to act, he is also called 
on to act cautiously, and to regulate his proceedings by an atten- 
tive consideration of the progress of events. He is never justi- 
fiable in attempting to transfer arts yielding utilities from foreign 
countries to his own, unless he have sufficient reason to conclude 
that they will ultimately lessen the cost of the commodities they 
produce, or are of such a nature, that the risk of waste to the 
stock of the community, from a sudden interruption to their im- 
portation from abroad, is sufficiently great to warrant the probable 
expense, both of the transfer and of maintaining the manufacture 
atffiome. It is his business first to ascertain these points, and to 
regulate his proceedings accordingly. 

When there are circumstances particularly unfavorable to the 
practice of the art, and no countervailing circumstances particu- 
larly favorable to it, the first introduction of it must always cost 
the society high, and the subsequent maintaining of it will in all 
probability be a burden on the common industry and stock. 
Among unfavorable circumstances may be noted a strength of 
the effective desire of accumulation, less than that of a foreign 
country, and instruments consequently remaining at orders of 
quicker return. This is a circumstance lying beyond the reach 
of the legislator, and which he cannot hope to change. If then 
there are no other counteracting favorable circumstances, the art 
cannot be transferred and preserved, but at great and continual 
expense. Examples of injudicious conduct of the legislator from 
inattention to this particular have been not unfrequent. As an 
instance, may be noted the attempts of Louis XIV. to make 
France a maritime and commercial nation. To do so, it only 
required that the principle of accumulation should have existed 
in sufficient strength among the people of France, to carry them 
to the construction of instruments of the same orders as were 


368 0F THE OPERATIONS OF THE LEGISLATOR, &c. 

formed in England, and other maritime and commercial nations. 
The French at that time had ships and commerce, and had their 
accumulative principle been so strong as to lead them to con- 
struct instruments returning as slowly as those formed by the 
English and Dutch, their commerce and navy would easily have 
rivaled those of these nations. The attempt of the British, in 
some instances, to supplant the Dutch in their fishery, was liable 
to a similar objection. 

Among circumstances particularly favorable to the transfer of 
a foreign art, may be noted the raw materials of the manufacture 
existing within the territory of the society in abundance. The 
acquisition of the art in this case saves the expense of a double 
transport. On this account, the bringing the woollen manufac- 
ture to England was a very happy measure. 

Great strength of the accumulative principle, is also another 
particularly favorable circumstance. This rendered the efforts 
of the English in the beginning of last century, to acquire many 
foreign manufactures, prudent and successful. 

The legislator effects his purposes by premiums for successful 
individual invitations of the foreign article ; by general bounties 
on the home manufacture ; or by duties on that imported from 
abroad. Of these, premiums take so little out of the common 
funds, that their amount forms an item too small to enter into the 
calculation, in questions of national policy. They are useful as 
testing the practicability of the transfer. That having been 
done, it haying been made sufficiently apparent that nothing 
prevents the branch of industry in question being established, 
but the difficulties attending new undertakings, the want of skilled 
labor, and a sufficiently accurate knowledge of the properties of 
the materials to be employed in the formation of the new instru- 
ments, it is then proper to proceed to direct and general encour- 
agements by bounties or duties. In this way real capital, and 
healthy enterprise are directed to the art, the difficulties attend- 
ing its introduction overcome in the shortest possible space, and 
the commodities yielded by it are produced at less outlay, and 
afforded at a less price than that, at which they were before im- 
ported. 


CHAPTER II. 


OF THE OPERATIONS OF THE LEGISLATOR ON LUXURIES, 

The legislator is always called on to provide a considerable 
annual revenue. He has to provide for the expenses incident to 
the conduct of present wars, to the burdens imposed by those 
of preceding times, to the construction and maintenance of public 
works, to the encouragement of science and art by premiums and 
otherwise, and to various other outlays. If any part, therefore, 
of this necessary annual expenditure, can be drawn from funds 
naturally dissipated in luxury, the art of the legislator will here 
effect a saving to the community to that amount. 

Commodities which are mere luxuries, derive their value, as 
we have seen,* from the difficulty of obtaining them. The 
amount of labor necessary to procure them, and which thus may 
be said to be embodied in them, is what makes them esteemed. 
It is through it that they become fit objects of vanity, marks of 
riches, things distinguishing their possessors from other men. It 
is of no consequence how this labor has been expended. It may 
have been given to ransack the depths of the earth as for dia- 
monds, or of the sea as for pearls. All that the possessor of the 
luxury desires, is, to have a means of showing that he has ac- 
quired the command of a certain amount of the exertions of other 
men. It is a matter of indifference to him, what the difficulty 
is, to surmount which these exertions are necessary. Thus, 
were we to suppose that diamonds could only be procured from 
one particular and distant country, and pearls from another, and 
were the produce of the mines in the former, and of the fishery 
in the latter, from the operation of natural causes to become 

* Book II. c. xi. 

47 


370 0F THE OPERATIONS OF THE LEGISLATOR 

doubly difficult to procure, the effect would merely be that in 
time half the quantity of diamonds and pearls would be sufficient 
to mark a certain opulence and rank, that it had before been 
necessary to employ for that purpose. The same quantity of 
gold, or some other commodity reducible at last to labor, would 
be required to procure the now reduced amount, as the former 
larger amount. Were the difficulty interposed by the regula- 
tions of the legislators of the distant countries, it could make no 
difference to the fitness of these articles to serve the purposes of 
vanity. As in the case of a natural difficulty, an additional 
quantity of labor would be requisite to procure the commodities 
in question, and they would, therefore, equally serve the pur- 
poses of vanity. Nor would it seem to alter the case, were the 
difficulty interposed by the legislator of the society consuming 
the articles. 

For the sake of illustration, we may suppose that some par- 
ticular society is possessed of a pearl fishery, from which its 
members are supplied with the pearls they use, and farther, that 
the case may assume the simplest form, that this society has no 
communication with any other. The fishery is situated in a 
particular bay, where alone, it is found, the animals yielding 
these concretions can live. The labor annually expended in 
procuring this luxury, amounts to a million days, or reckoning 
each day at two shillings, to one hundred thousand pounds. 
Each day’s labor procures one hundred oysters; from which, on 
an average, one pearl is procured. In this state of things a dis- 
covery is made, similar to that which Linneus conceived proba- 
ble. It is found, that, by a particular process, the diseased 
action in this creature, which, like ossification in the human 
body, produces a deposition of calcareous matter in its fleshy 
substance, instead of on the sustaining earthy portion of its frame, 
may be induced ad libitum. The effect of this discovery is to 
diminish very greatly the labor necessary to procure these sub- 
stances. In process of time, every hundred oysters, instead of 
one, yield, on an average, five hundred pearls, consequently the 
amount of labor expended in procuring each might be little more 
than the five hundredth part of what it was. 

The ultimate effect of such a change would depend on whether 
the fishery were free or not. Were it free to all, as pearls could 
be got simply for the labor of fishing for them, a string of them 


ON NATIONAL STOCK. 


371 


might be had for a few pence. The very poorest class of women 
in the society could, therefore, afford to decorate their persons 
with them. They would thus soon become extremely vulgar, 
and unfashionable, and so at last valueless. 

If, however, we suppose that instead of the fishery being free, 
the legislator owns and has complete command of the place, 
where alone pearls are to be procured, as the progress of dis- 
covery advanced, he might impose a duty on them equal to the 
diminution of labor necessary to procure them. They would 
then be as much esteemed as they were before. What simple 
beauty they have would remain unchanged. The difficulty to 
be surmounted in order to obtain them, would be different, but 
equally great, and they would, therefore, equally serve to mark 
the opulence of those who possessed them. If we suppose the 
yearly expense of obtaining the pearls, and of collecting the duty 
on them, to amount to twenty thousand pounds, there would 
then remain to the legislator, a clear annual revenue from this 
source of eighty thousand pounds. This revenue would not 
cost the society any thing. If not abused in its application, it 
would be a clear addition of so much to the resources of the 
community. 

Were the precious metals in reality, as Adam Smith seems to 
have conceived, mere luxuries, a tax imposed on them at the 
mines would have a similar effect to the hypothetical tax on 
pearls, which we have been considering. It would make a real 
addition of so much to the revenue of the community possessing 
the mines. In this case the tax imposed by the king of Spain 
on the gold and silver obtained from America, amounting at first 
to half of the whole quantity annually procured, would not, 
unless among the first adventurers, have caused any diminution 
of the revenue of individuals, and its produce would have formed 
a large real addition to the general revenue of the society. 

Neither in this case, however, nor perhaps in any other, have 
commodities altogether luxuries presented themselves to the 
operations of the legislator. They all, probably, derive part of 
their value from their utility, although in many instances the part it 
makes up may be very small. Hence a general tax upon almost 
any class of commodities, is a tax in whole, or in part, upon 
some utility, and abstracts something from the revenue of its 
consumers. All silk goods are perhaps in part luxuries to the 


372 0F THE OPERATIONS OF THE LEGISLATOR 

majority of those who consume them. They are also, however, 
in a very great degree, and to all classes, utilities. There is a 
real beauty and durability in such fabrics, probably in many cases 
sufficient to warrant the higher price paid for them. A general 
tax, therefore, upon silks, though it would in part be a tax on 
luxuries, and, in so far, occasion no diminution of the revenues 
of any one, would also in part be a tax upon utilities, abstracting 
a real amount from the funds of individuals. The same things 
will hold true concerning a great number of commodities. Pure 
vanity, and real enjoyment, have each a place, as we have seen, 
in the general expenditure of almost every person. 

But though this is true of taxes levied generally on any class 
of commodities, it yet not unfrequently happens, that taxes on 
commodities of the same class may be so ordered as to fall nearly, 
or altogether, on luxuries. It may be, though a whole class of 
commodities have, under the appearance of luxury they exhibit, 
a considerable substratum of real utility, that yet individuals of 
the class, not differing from others in the quantum of utility they 
possess, may have some peculiarities serving to afford a hold to 
vanity, and to enable that passion to raise their value very high, 
by making them pass as marks of the superiority of one man over 
another. As these, therefore, differ from other commodities of 
the sort, merely in the amount of luxury embodied in them, a 
tax on them may be considered as altogether a tax on luxuries, 
giving a revenue to the legislator, and taking nothing from the 
society. 

Alcoholic liquors, considered as a class, are probably, in a 
great degree, luxuries. They may in part be really useful, but 
certainly, speaking in the general, their consumption is not 
measured by the utility resulting from it. Some of them, how- 
ever, agreeing with each other in the amount of utility they may 
possess, differ yet largely in the quantum of luxury embodied in 
them. Thus it is, I apprehend, very difficult to say whether 
rum, brandy, whisky, or gin, considering each with regard to 
its intrinsic qualities, is the preferable liquor. It seems probable 
that they are nearly alike in most respects, save their being more 
or less luxuries. In Great Britain rum is, I believe, at least 
double the price of whisky, and brandy still higher, the con- 
sumption, therefore, of the dearer article instead of the cheaper, 
must arise nearly altogether from vanity. In Canada, again, 


ON NATIONAL STOCK. 


373 

the price at which Scotch whisky is sold, is double the price of 
rum, and considerably above the price of brandy. The excess 
of its price above these other liquors must, therefore, be con- 
sidered a luxury.* The chief part of the high price in England 
of rum and brandy, is made up of the duty paid to the govern- 
ment. In this case, therefore, the legislator would seem to de- 
rive a revenue from mere luxuries. Were such duties withdrawn, 
and were not the measure to lead to an increased and extrava- 
gant consumption of alcoholic liquors in general, it would have 
the effect of changing the sort of liquors consumed. Rum and 
brandy being as cheap as whisky, would come, with many 
people, to occupy the place of it, they would no longer afford a 
peculiar gratification to vanity, and that passion would fly off to 
some other article, fitted for its purpose, in all probability, not 
by the operations of the legislator, but by the real expenditure 
of labor or some equivalent to it. The society, considered as a 
body, would lose the advantages of the revenue before at the 
command of the legislator, and, considered as individuals, they 
would gain nothing. Certain classes among them would merely 
change the form of some of the characters, by which they marked 
to others their relative means and stations. 

It would appear, then, that the powers of the legislator, when 
prudently directed in the taxation of luxuries, may be so exer- 
cised as to raise a considerable revenue, without trenching at all 
on the incomes of individuals. It is to be observed, that his 
proceedings in this way have a greater chance of success, when 
he levies duties on foreign, than on domestic commodities. 
Almost all commodities of home manufacture form large classes, 
running gradually into one another, and so not easily discrimi- 
nated, or affording any very striking characteristics to serve the 
purposes of vanity. If we examine, for instance, the manufac- 
tures in Britain of cloths, or of malt liquors, we shall find in them 
all a great number of commodities differing very little from each 
other. If a heavy duty be then imposed on any of them, there 
is a considerable chance of its consumption greatly diminishing or 
ceasing altogether. Were porter taxed more highly than other 

* The quantity consumed is small, it would in all likelihood be much greater 
were it not for the difficulty of distinguishing it from whisky of the country, 
which sells at less than one fourth of the price. Scotch whisky being 10s 
per gallon, Canadian from 2 s to 3s. 


374 OF THE OPERATIONS OF THE LEGISLATOR 

malt liquors, there are so many sorts of ales which very nearly 
resemble it, or might be made to do so, that instead of being con- 4 
verted by the tax into an especial luxury, it is probable the con- 
sumption of porter would nearly cease. The imposition of a 
high duty on any particular sort of foreign wine, has not so great 
a tendency to diminish its consumption ; people would still drink 
claret, however highly it were taxed, because it has qualities 
sufficiently marked to distinguish it from other wines, and to 
make, therefore, its consumption capable of denoting a degree of 
present opulence, proportioned to the price it costs. 

Some commodities of domestic manufacture are, nevertheless, 
much better fitted for the operations of the legislator than others. 
A duty, for instance, on the finer textures of cottons and linens, 
might perhaps be so levied as to make it nearly altogether a tax 
on luxuries. The fineness of the thread in these fabrics, affords 
a pretty conspicuous mark, and by raising the impost gradually 
in proportion to it, the more delicate sorts might, perhaps, come 
to be esteemed as adequate marks of a capacity to expend largely 
and so be converted into especial luxuries. In this case part of 
the expenditure of individuals, which is now dissipated in chang- 
ing fashions, would be made over to the legislator, and might 
suffice to sustain some part of the public burdens. 

All such duties, however, require to be laid on very gradually, 
else the consumption of the commodities on which they are im- 
posed may very probably be stopped. Men have generally a 
very high opinion of the reasonableness of their conduct, and the 
correctness of their taste. They are apt to fancy that there is a 
real and very great enjoyment in expenses, which, in truth, have 
scarce any thing to recommend them but the gratification they 
afford to vanity. In like manner, when any article rises suddenly 
and greatly in price, when in their power, they are prone to adopt 
some substitute and relinquish the use of it. In such cases the 
observation is forced on them, that the commodity is no better 
than it was before, and that, if then they sometimes used another 
for it, the best thing for them now to do is to confine themselves 
altogether to that other. Hence, were a high duty at once im- 
posed on any particular wine, or any particular sort of cotton 
fabric, it might have the effect of diminishing the consumption 
very greatly, or stopping it entirely. Whereas, were the tax 
at first very slight, and then slowly augmented, the reasoning 


ON NATIONAL STOCK. 


375 


powers not being startled, vanity, instead of flying off to some 
other objects, would be apt to apply itself to them as affording a 
convenient means of gratification. 

The chief practical objection to such imposts, as a source of 
revenue, is the expense of collection and the attempts generally 
made to evade them. The former diminishes the amount yield- 
ed by them, the latter is injurious to the morals of the people. 
Both are greater in commodities of domestic, than of foreign 
manufacture. In articles produced within the country, it is 
necessary to watch the whole progress of manufacture, and to 
guard against imposition at every stage. Commodities, on the 
other hand, imported from abroad, have only to be watched at 
the time and place of importation. 

There is a case in which duties imposed on foreign commodi- 
ties, have particular advantages. It not unfrequently happens 
that in manufactures which it is the object of the legislator to 
introduce, and carry to perfection within the society, the chief, 
perhaps the only difference, between the enjoyment afforded by 
the foreign and by the domestic article lies in the gratification the 
former affords to vanity. This is very generally the case in all 
commodities affording materials for such articles of dress as are 
seen by many, these being always in a great degree luxuries. I 
very much question, for instance, whether the passage of the 
manufacture of calicoes from Britain to America, has occasioned 
the wearers of calicoes in the United States any sensible diminu- 
tion in the comfort, or in the pleasure arising from the perception 
of beauty, afforded by such articles. The standard is in such 
cases altogether relative, the pleasure given by any particular 
dress of this sort arising from its being as fashionable, and as be- 
coming as the dresses of other persons, or more fashionable and 
more becoming than theirs, and the chief requisite for rendering 
any fabric fashionable, seeming to be that it be costly, and have 
novelty. The unrestrained introduction of British or other foreign 
calicoes would, therefore, in all probability, have been felt, merely 
as a change in fashion, not as an increase of pleasure or diminu- 
tion of cost. 

There are very many similar cases. As the great mass of 
commodities are in part utilities, in part luxuries, so, in transfer- 
ring the manufacture of any of them from one country to another, 
it very frequently happens that, in as far as the article in question 


376 OF THE OPERATIONS OF THE LEGISLATOR, <fcc. 


has real utility, the domestic soon equals the foreign variety. It 
is chiefly in a laborious finish, for the most part the result of the 
demands of vanity, that the former falls behind the latter. In 
such instances the operation of transferring the art from one 
country to another, by means of a protective duty, takes either 
very little, or nothing, frdm the revenue of individuals, and makes, 
it may be, a considerable addition to that of the legislator. Its 
general effects on the funds of the community, are directly, and 
indirectly, to advance the absolute capital of the society by the 
introduction of a new art, and, during the process, to give a con- 
siderable revenue to the legislator for the attainment of public 
objects, without encroaching at all, or but in a very slight degree, 
on the returns made by the industry or stocks of individuals. 


, \ 


CHAPTER III. 


OF OBJECTIONS TO THE INTERFERENCE OF THE LEGISLATOR IN THE CASES 
INDICATED IN THE TWO PRECEDING CHAPTERS. 

It appears, therefore, that there are at least two modes by 
which the legislator can effectively advance the general stock. 
1st. By effecting the passage of the useful arts from foreign 
countries to his own : 2d. By applying to useful purposes a 

portion of those funds, which, in all societies, ard otherwise dissi- 
pated in the production of mere luxuries., 

To these positions several objections may be made, of which 
some are founded on the nature of things, others arise almost 
entirely from the ambiguity of language. 

It may, probably, occur to the reader, that I have considered 
the legislator as always endeavoring to act for the good of the 
society, and capable of understanding what is for its good, 
whereas, in reality, the individual or individuals in whom the 
legislative pow r er is vested, very often neither understand what is 
for the general welfare, nor act so as to promote it. This objec- 
tion carries us to the nature of laws and government, and can, 
therefore, be only very generally answered. 

I would observe, then, that though in other matters, as in 
projects of distant conquest, or in intrigues for changing the con- 
stitution, the legislator may act in opposition to the common 
interests, yet, speaking generally, in all his proceedings relative 
to the wealth of the community) it is his aim to act in accordance 
with them. In despotic governments this is the case, because 
there the legislator looks on the wealth of the people as his own ; 
in free governments because in them his interests are identified 
with theirs. It may be that he does not adopt judicious measures 
for the purpose, but if so, it is his judgment, not’ his will that is 
in fault. 


48 


378 OF THE operations of the legislator 

Again, it must be granted that the perfection, or imperfection 
of action of the power invested with legislative authority, depends 
chiefly on the prevalence or defect, of intelligence and public 
spirit throughout the community. Every government rests on 
opinion. Whenever the majority are thoroughly convinced that 
they would derive advantages from a change in the constitution, 
or in the person or persons administering it, the time of a 
revolution approaches. It is only from the members of any 
society not perceiving what would be for their good, or not 
believing they can find among them men sufficiently honest or 
intelligent to execute what would promote it, that the legislative 
powder can be greatly or permanently vicious or defective. There 
is always a close connexion between the nature of the people 
and of the government. Despotism and anarchy imply a general 
debasement in the intellectual and moral powers ; freedom and 
order, an elevation of them. The more despotic the 1 government 
the more dependent on the will or caprice of a single person, 
the more it is subject to error in all legislative measures. The 
more despotic the government, however, the less also the intel- 
ligence, and the greater the selfishness, and consequently the 
vanity of the governed. The less, also, the inventive power, 
and the advance in science and art, and the greater the addiction 
to luxury.* But the less the comparative advance in science 
and art, and the greater the addiction to luxury, the greater 
facility is given to such operations of the legislator as have for 
their aim to increase the wealth of the community. The farther 
any society is behind others in a knowledge of the useful arts, 
the greater the number of new arts that may be introduced ; the 
larger the amount of luxury that prevails in it, the greater the 
revenue that may be raised by taxation without interfering with 
individual income. Hence, speaking generally, if legislators in 
despotic governments, were other circumstances equal, would be 
more prone to go wrong ; they have there so great facility in 
acting, that they have greater chance to go right. 

A reference to examples will make this apparent. If, for an 
instance of one of the most ignorant and slavish of existing socie- 
ties, we turn to some one of the islands of the South Sea, it will 
be allowed that a legislator of intelligence and perseverance might 


See page 321, 322. 


ON NATIONAL STOCK. 


379 


there effect much good by introducing among them the arts of 
men farther advanced in the career of improvement. Though 
we cannot expect to find such a legislator there, one would be 
inclined to augur favorably of the effects likely to result from the 
unskilful efforts of even any of their barbarous chiefs, directed to 
so praiseworthy an object. We should not conceive he wasted 
the resources of his country, by turning part of the national funds 
to such purposes. Of extensive countries where unmitigated 
slavery and despotism prevail, Egypt is perhaps most under the 
eye of Europeans. It is not, however, commonly believed by 
them, that the projects of its present ruler for the introduction 
into it of modern science and art, are inconsistent with the dictates 
of sound policy. Facts would demonstrate the fallacy of any 
such supposition. Errors, no doubt, may have been, and may 
be committed, but the good assuredly overbalances the evil. 
The revolution wrought in Russia by Peter the Great, is another 
instance of the same sort. In such cases the power of the legis- 
lator to effect beneficial changes is so great, that even his most 
blundering efforts are seldom altogether successless. A fruitful 
soil yields large returns, even to a very unskilful husbandman. 
If we pass from them to governments, of which freedom, intelli- 
gence, and public- spirit, are the moving powers, we find there, 
that though the capacity to produce good is diminished, the 
liability to error is also diminished. It were folly in the legisla- 
ture of the United States, to imagine itself capable of giving an 
impulse so sudden and great, to the resources of the country, as 
that brought about in Egypt by the present Pacha, or in Russia 
by the first Peter. It has the advantage, however, of being 
much less liable to error. Every important measure there agi- 
tated, before it can be adopted, is subjected to the scrutiny of great 
numbers of intelligent and well informed individuals, stimulated 
alike by their regard to their country and to themselves, to trace 
out with accuracy its future operation and effects. By this 
means the greatest security, of which the nature of human affairs 
admits, is given against the adoption of impolitic or hurtful 
schemes. With such cautions, the legislator may with prudence 
undertake a series of measures, that, under other circumstances, 
were of very doubtful expediency. 

In one sort of government, therefore, the facility of action 
gives warrant to act, and in another the probable freedom from 


380 OF THE OPERATIONS OF THE LEGISLATOR 

error. In both it is the part of the legislator to act, but to act 
in conformity to the laws arising from the constitution which na- 
ture has given to man and to matter. In doing so instead of 
acting in opposition to nature, he fills his natural place in a sys- 
tem established by nature. In both, also, it is the part of the 
inquirer into the principles of politics, to endeavor to throw light 
along the path of the legislator, not vainly to attempt to persuade 
him, that an insuperable obstacle blocks it up. 

Finally, concerning this objection, it may be observed, that it 
refers to casual ills connected with what is in itself an acknow- 
ledged good, and is of a character altogether different from those 
springing from the doctrines of the followers of Adam Smith. 
They hold up legislative interference as necessarily and essen- 
tially evil. 

The second objection I have to note, as resulting from the 
nature of things themselves, is the possible evil effects of an ex- 
cessive revenue accruing to the legislator, from protecting and 
encouraging the industry of the society and turning into his 
own coffers as much as possible of , the amount otherwise dissi- 
pated in luxuries. A superabundant revenue in the hands of 
the legislator, though directly a great good, is sometimes, indi- 
rectly a great evil. It may enable him, without any expense to 
the society, to carry on projects that must otherwise have pressed 
heavily on its resources, but it also places an instrument of great 
power in his hands, and one which, in certain circumstances, he 
may turn to very pernicious ends. It may have an effect similar 
to that which the discovery of the western continent produced 
on Spain. The direct effects of the riches that flowed in from 
the new world, were mightily to increase the power of the 
Spanish monarchy. Indirectly, however, their effects were to 
corrupt the court and the nobles, and to spread wide, through the 
higher classes, a dissolute, and yet a mercenary spirit. The 
objection, however, only refers at all to countries where there 
are no public burdens to absorb the surplus public revenue. It 
is, consequently, totally inapplicable to Great Britain. It also 
chiefly refers to countries where there are no efficient checks to 
abuses of the legislative or executive powers. This, too, it may 
be observed, is an objection which, as far as I know, has not 
been urged by modern political economists. 

The objections, which have their foundation in the views of 


ON NATIONAL STOCK. 


381 


the subject presented by Adam Smith, and which are urged by 
his present followers, depend mainly on the nature of words, and 
the sophisms produced by a generalization from names instead of 
things' — 'from preconceived notions which verbally, but not really, 
embrace the phenomena. Terms, and so, also, reasonings, fitly 
applied to the operations of individuals in the preservation, enjoy- 
ment, and increase of wealth, are transferred immediately to 
societies, and the rules and principles which hold good in the 
one, are assumed to be exactly applicable to the other. If w T hat 
is thus taken for granted be admitted, farther discussion is un- 
necessary, for the truth of the proposition to be proved, is implied 
in the terms in which it is enunciated. It has been my aim, 
throughout the preceding pages, to expose the fallacy of these 
assumptions, and, consequently, of the arguments resting on them. 
It is only necessary for me here, then, to state very shortly the 
objections, and the answers to them. 

It is said capital can only augment by accumulation, and, 
as the interference of the legislator takes something from indi- 
vidual revenue, it must also take from the power to accumulate, 
and, consequently, instead of augmenting, must tend to diminish 
the sum of the capitals of all the individuals in the society, that is 
the national capital or stock. This objection proceeds on two 
assumptions, the first, that the nature of national capital, or stock, 
about which the whole discussion turns, which it is the object of 
the inquiry to investigate, and concerning which scarce two 
authors of note agree in opinion, is known previously to any 
investigation, and is precisely identical with the notion suggested 
by the same term applied to individual wealth. The second, 
that what is generally true concerning individual capital, is 
universally true concerning national capital, and that, as the 
former commonly augments by accumulation, the latter can do 
so in no other manner. 

The answer to this objection is, that the proceedings of the 
legislator may increase the absolute capital and stock of the 
society, the provision, that is, for future wants, embodied in the 
stock of instruments possessed by it, though they may not 
increase, and may even a little diminish its relative capital, or the 
sum which would be brought out by measuring those instruments 
with one another. That it is the amount of the absolute capital 
of the society, which is the proper measure of the wealth of the 


382 OF THE OPERATIONS OF THE LEGISLATOR 

whole, and of each individual, and that whatever augments it not 
only directly, and of itself, advances national wealth, but ulti- 
mately, also, does so indirectly, through the stimulus given to 
the accumulative principle, and the addition thence arising to 
relative capital. 

This objection and the answer to it apply to utilities. The 
second objection refers to the proceedings of the legislator con- 
cerning commodities wholly or in part luxuries. It proceeds on 
the same assumption, that what is true concerning the wealth of 
individuals, $nd sufficiently explains its increase and diminution, 
is also true concerning the wealth of societies, and fully explains 
the causes of its increase and diminution. 

If, other circumstances remaining unaltered, a single individual 
in a society acquires the power of purchasing some article enter- 
ing into his system of consumption, at less cost than before, he 
is by so much a gainer, and the change is equivalent to a propor- 
tional increase in revenue. Transferring this fact to societies, it 
is held that the revenue of every society is increased in' exact 
proportion to the diminution in the cost of any article entering 
into its system of consumption, and diminished in proportion to 
the increase in the cost of any such article. By how much, 
therefore, any operations of the legislator add to the price of any 
corpmodity, by so much,' it is said, they always, and in every 
case, take from the revenue of the society. When, therefore, 
by taxing foreign luxuries, the legislator raises their price, it is 
asserted that he proportionally diminishes the general revenue. 

The answer to this objection is, that though as every com- 
modity consumed by an individual, derives the estimation in 
which it is held from something in some most complicated system 
of persons and things constituting the society of which he is a 
member, while that system remains in all its parts unchanged, 
whatever gives him the command of a greater portion of the 
particular commodity than before, necessarily increases the 
amount of commodities, which, compared with others, he pos- 
sesses, and thus makes him, as compared with them, so much 
richer; yet, if any commodity become universally cheaper 
throughout a whole society, as this implies a change to a certain 
extent in the system of things, comprehended with persons in 
the term society, it may be that the revolution may affect the 
causes giving estimation to the commodity in question, and that, 


ON NATIONAL STOCK. 


383 


until we know whether or not this be the case, and how it oper- 
ates, we act with unwarrantable rashness in transferring rules 
true concerning individuals, to societies, and in asserting that a 
general diminution in cost, is, in all cases, equivalent to a general 
increase of revenue, or a general augmentation of cost, to a general 
diminution of revenue. That if there be any class of commodi- 
ties, the estimation of which depends wholly, or in part, on their 
power to mark the possession of a certain relative superiority, 
or a command greater or less of the labor of other men, then the 
generally diminished cost of such commodities, lessening their 
power to mark the desired distinction, and taking thus in a like 
degree from that for which they were altogether, or in part, 
esteemed, either makes no change in the general revenue, or a 
smaller change than that indicated by the amount of the diminu- 
tion. That such commodities serving merely, as Mr. Storch 
expresses it, for marks of opulence, their fitness for the purpose 
is diminished as their cost becomes less, and, therefore, a dimi- 
nution of their cost produces no increase, or no proportionate 
increase, of general revenue, and an increase of it, no diminution, 
or no proportionate diminution of general revenue. That thus, 
though, were the power of procuring a string of pearls for a few 
hours labor given to any individual European, it might very greatly 
increase his wealth, yet, the same power given to all Europeans, 
w T ould produce no increase, or no proportional increase to Euro- 
pean wealth, and, on the contrary, as the facility of purchase 
by putting the wearing of peals out of fashion, would probably 
render the stock of these articles in the possession of individuals, 
valueless, it would, in all probability, proportion ably diminish 
the amount of wealth actually existing.* 

\ 

* It is remarkable that neither Adam Smith, nor Mr. Say, nor Mr. Storch,. 
although they have stated distinctly enough in various places, that many 
commodities derive their whole, or the greater part of their value, from the 
gratification they afford to vanity, — their power to mark the superiority of 
one man over another, — seem to have perceived that the admission was fatal 
to the majority of their theoretical conclusions. They consequently have not 
thought it necessary to adduce any reasons to show that the operations of the 
legislator, on such commodities, may not have the beneficial effects indicated 
in the text. Mr. Say, indeed, has the following passage. 

“ De ce que le prix est la mesure de la valeur des choses, et de ce que leur 
valeur est la mesure de leur utilite, il ne foudrait pas tirer la consequence 
absurde qu’ en faisant monter leur prix par la violence, on accroit leur utilite. 
La valeur echangeable ou apprecative nest une indication de 1 ’utilite donnee 


384 0F THE OPERATIONS OF THE LEGISLATOR 

If the legislator, by an arbitrary and secret act, could impose 
a duty on the share of any commodity consumed by an individual, 
the rest of the community going free, that individual would un- 
doubtedly be exactly so much a loser. It would be to him a 
matter of indifference what the commodity in question were. If 
the circumstances of his condition obliged his wife to wear jewels, 
or him to have a supply of claret on his table, an arbitrary impost 
of the sort on the claret he consumed, or the jewels his wife 
wore, would probably be to him equivalent, to a like exaction 
on coals or bread. In the same way, a secret remission to a 
single individual of the duty levied on any article, would be just 
so much gain to him. 

The fundamental error on this subject of Adam Smith, and 
the present prevailing school of political economists in England, 
lies, in their assuming, that what is true concerning an individual, 
is true, also, concerning a community, and maintaining, conse- 
quently, that every impost is so much absolute loss to the society, 
and every'diminution of it, so much gain. Before this assump- 
tion can be made good, with regard to any particular impost, it is 
necessary that the three following questions concerning it should 
be determined. 

1st. Will the duty so levied, by directly or indirectly effecting 
an improvement in the arts, increase the absolute capital of the 
society ? 

2d. Will it prevent future waste, by the transfer of an art pro- 
ducing useful commodities, the supply of which is liable to sud- 
den interruptions ? 

3d. Does it fall partly or altogether on luxuries, and is its real 
effect, consequently, not to diminish, by so much, the annual reve- 
nue of the society, but only to apply a part of it, which would 


de la production r6elle, qu’autant que cette valeur est abandonnee a elle meme 
et que l’action des hommes qui font un raarche est entierement libre ; de 
meme qu’une barometre n’indique la pensateur de P atmosphere, qu’autant 
que le mercure peut s’y mouvoir avec facilite.” p. 5. vol. I. 

So far as the above is applicable to luxuries, it is evidently nothing but an 
ipse dixi dressed in a metaphor, — a sort of argument too . economical to admit 
of an answer. If luxury, “ Luxe de l’ostentation,” be, as Mr. Say himself 
says, “ une consommation qui n’a pour objet que cette depense meme ; une 
destruction de valeur qui ne se propose d’autre but que cette destruction,” * 
it surely matters not to the consumer how this value be given to the com 
modity. 

* Vol II. p. 225. 


ON NATIONAL STOCK. 385 

otherwise have been dissipated by vanity, to supply funds for 
the necessary expenditure of the legislator? 

Unless these questions can be all answered in the negative, 
the assumed parallel between the effects of an impost on an 
individual, and on a community, does not hold, and the whole 
reasoning founded on it falls to the ground. 




I 






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NOTES. 


NOTE A. Page 1. 

“We derive from Dr. Smith no assistance in forming our opinions 
on this important subject; for he seems to have had no fixed ideas 
in relation to it. Indeed, there is no opinion that has been any 
where maintained on the subject of the sources of national wealth, 
which does not appear to have been adopted in different parts of 
the Inquiry into the Wealth of Nations. 

1. “ The annual labor of every nation is” at one time stated to 
be “ the fund which originally supplies it with all the necessaries 
and conveniences of life which it annually consumes, and which 
consists always either in the immediate produce of that labor, or in 
what is purchased with that produce from other nations.” * * * § 

2. Lands, mines, and fisheries, elsewhere are regarded as repla- 
cing, “ with a profit, not only the capitals employed in them, but 
all the other capitals employed in the community.” f That, how- 
ever, which replaces all the capitals employed in the community, 
and is the source from whence they derive their profit, must be the 
sole source of wealth. Mankind are, therefore, here considered as 
deriving the whole of their wealth from land. J 

3. Again, plain reason is stated to dictate, that the real wealth of 
a country consists in the annual produce of its land and labor; 
and this opinion, which coincides with that of the Bishop of Cloyne,§ 
and the learned author || of the Essay on Money and Coin, is most 
generally adhered to by Dr. Smith. 


* Wealth of Nations, vol. I. p 1. 4to. edit. This opinion is maintained by 
Mr. Hume. See his Discourse of Commerce, p. 12. edit. 1752. 

t Wealth of Nations, vol. I. p. 338. 4to. edit, 

t Ibid, vol. I p. 414. 

§ Querist. Quer. 4. 11 Whether the four elements, and man’s labor therein, 
be not the true source of wealth.” 

|| “ Land and labor together are the sources of all wealth, without a com- 
petency of land, there would be no subsistence ; and but a very poor and un- 
comfortable one without labor. So that wealth or riches consist either in a 
property in land, or in the products of land and labor. 


388 


NOTES. 


4. In another part of the work, however, we find it asserted, that 
“land and capital stock are the two original sources of all reve- 
nue, both private and public : capital stock pays the wages of pro- 
ductive labor, whether employed in agriculture, manufactures, or 
commerce.” # Land and capital are, therefore, here deemed the 
sole sources of wealth ; and labor is considered as deriving from 
them its wages, without adding to the opulence of the community. 

5. Lastly, we are taught to consider land, labor, and capital, as 
being all three sources of wealth; for we are told that, “ whoever 
derives his revenue from a fund that is his own, must draw it either 
from his labor, his stock, or his land. The revenue derived from 
labor is called wages; that from stock, profit; and from land, 
rent ; ” f an opinion which seems to have been hinted at by Sir 
William Petty, | when he stated it as an impediment to the wealth 
of England, that taxes were not levied upon lands, stock, and labor, 
but chiefly upon land alone, though land and labor are generally 
considered by that ingenious writer as the sole source of wealth. 

In treating of political economy, the science which professes to 
display and to teach means of increasing the wealth of a state, it 
would seem that the first and most anxious object of inquiry ought 
to have been, what wealth is, and from what sources mankind de- 
rive it? for it appears impossible to discuss with precision the means 
of increasing any thing, without an accurate notion of its nature 
and of its origin.” Lauderdale. 

To this catalogue of the various notions held out in the Wealth 
of Nations, concerning the nature of that wealth, Lord Lauderdale 
might have added another, showing some general resemblance to 
that exhibited in the present work. “Wealth,” we are told, B. V. 
c. i., “always follows improvements of agriculture and manufac- 
tures, and is, in reality, no more than the accumulated produce of 
those improvements.” 


B. Page 4. 

“ Si P on se demande en effet en quoi consiste la richesse, on 
n’est pas peu surpris de ne trouver dans les auteurs les plus estimes 
que des opinions differentes ou contraires. 

“ Les uns la font consister dans Puniversalite des proprietes 
privees,§ et d’autres dans Pabondance des denrees. || 

“ Ceux-la distinguent la richesse publique de la richesse particu- 
liere, donnent a la premiere une valeur d’ usage et non e?’ echange , 
et a la seconde une valeur d’ echange et non d’usage, et font consister 
cette derniere dans la valeur venale du produit net : ft 

i 

* Wealth of Nations, vol. II. p. 560. 

t Wealth of Nations, vol. II p. 63. 

t Tracts, edit. 1768, p. 268. 

§ Treatise of taxes by William Petty — Gregory King calculation, pub- 
lished by Davenant — Becke observations on the produce of the income tax. 

|| Dime royale du mar6chal de Vauban. 

IT Physiocratie, p. 118 — Philosophic rurale, p. 60. 


NOTES. 


389 

** Ccux-ci la composent de toutes les choses materielles dont 

lomme pent faire usage pour satisfaire un besoin ou une jouis- 
sance de sensualite, de fantaisie ou de vanite.* * * § 

‘ Un autre ecrivain regarde la richesse comme la possession 
d une chose plus desiree par ceux qui ne V ont pas que par ceux qui 
enjouissent.f ■ . * 

“ Un autre ecrivain la definit le superfiu.% 

‘ Un autre ecrivain la place dans l’accumulation du travail exigi- 
ble. § 

Adam-Smith dit tantot qu’un homme est riche ou pauvre selon 
le plus ou moins de choses necessaires, utiles ou agreables a la vie 
dont il peut se procurer la jouissance ; tantot qu’un homme est riche 
ou pauvre selon qu’il peut disposer de plus ou moins de travail ; 
tantot que la richesse reelle d’un pays consiste dans le produit 
annuel de ses terres et de son travail. || 

“ Un ecrevain recent definit la richesse, tout ce que l’homme 
desire comme utile et agreable.|[ 

“ Les richesses, dit M. Say, se composent des choses qui ont une 
valeur.** * * §§ 

“ M. Ricardo pense que la valeur differe essentiellement de la 
richesse, et que les choses, une fois qu’elles sont reconnues utiles 
par elles-memes, tirent leur valeur echangeable de deux sources, 
de leur rarete, et de la quantite de travail necessaire pour les ac- 
querir.ff 

“ M. Sismondi definit la richesse, le fruit du travail accumule et 
non encore consomme. 

“ Cette incertitude sur la nature de la richesse se reproduit dans 
l’examen des moyens qui peuvent contribuer a sa progression, a 
son accroissement et a sa grandeur. 

“ Ceux qui ont ecrit les premiers sur cette matiere importante, 
seduits par 1’apparence des faits, ont attribue aux metaux precieux, 
obtenus en retour de l’exportation des produits du sol et de l’indus- 
trie de chaque pays, la cause de la richesse des peuples.§§ 


* Essai sur la nature du commerce, par Cantillon. — Abrege des princi- 
pes d’economie politique, par M. le senateur Germain Garnier, Paris, 1796. 
M. Malthus, Principes d’economie politique consideres par rapport & leurs ap- 
plications practiques (page 23.) 

t Richezza e il possesso d’alcuna cosa che sia piu desiderata dal altri che dal 
possessore, Galiani, della Moneta. 

t II superfluo costituisce la richezza, Palmieri, publica Felicity, tome I. 
page 155. 

§ Princ. d’6con. polit., par M. Canard, Paris, 1801. 

|| Rich, des nat., in-4to. vol. I. pag. 209 et 338. 

IT An inquiry into the nature and origin of public wealth, by Earl of Lau- 
derdale, chap. 2. page 56 et 57. 

** Traite d’econ. polit., page 1. 

ft Des principes de l’economie politique et de l’impot, tome II. chap. 20. 

+t Nouveaux principes d’economie politique, tome I. page 60. 

§§ En Angleterre, Raleigh, Essai sur le commerce, en 1595. — Edouard 
Misseldeist, Cercle du commerce, en 1623. — Louis Roberts, Tresor du 
trafic, en 1641. — Thomas Munn, Tresor de 1’ Angleterre pour le commerce 
etranger, en 1664. — Fortrey, Interets et ameliorations de 1’Angleterre, en 
1664. — Davenant, dans son ouvrage relatif au commerce et au revenu de 
1’Angleterre, tome 1. page 16, en 1696. — M. Martin, inspecteur-general des 
douanes, ou le Marchand anglais, en 1713. 


390 


NOTES. 


“D’autres ecrivains en ont place la source dans la reduction de 
Finteret de F argent.* 

“ Les economistes, entraines par une theorie seduisante et cap- 
tieuse, ont exalte le systeme agricole.f 

“ Adam-Sraith lui a prefere le travail qui se perfectionne par sa 
division, et qui, apres qu’il est fini, se fixe et se realise dans un ob- 
jet permanent. | 

*• Lord Lauderdale, dans Fouvrage precite, ouvrage remarquable 
par la finesse de ses aperjus, fait deriver la richesse de Tart de sim- 
plifier et d’abreger le travail et d’ameliorer ses produits, resultat 
necessaire de F accumulation et de la direction des capitaux. 

“ M. Say fait deriver la plus grande augmentation de la richesse, 
de Femploi des capitaux dans Fagriculture.§ 

“ De 1’ union des systemes d’agriculture et de commerce, dit M. 
Malthus, depend la plus grande prosperite nationale.|| 

“ M. Ricardo est d’avis que la richesse d’un pays s’accroit de 
deux manieres : par Femploi d’une portion plus considerable du 
revenue a Faccroissement du travail productif, ou en rendant plus 
productive celle qui existed 

“ M. Sismondi ne voit Faccroissement des richesses que dans 
Faccroissement des jouissances nationales.” ** Ganilh des Systems , 
Tome 1. p. 14. 


C. Page 8. 

At the time the reference to this note was made, it was my inten-. 
tion to have here inserted some extracts from the North American 
Review, and some other publications, for the purpose of showing 
the views entertained in this country concerning the system of 
Adam Smith, and some of his followers. As far as concerns this 
continent, however, these extracts would be superfluous, and I have, 
therefore, thought it better to omit them, until such time as the 
work appear in Great Britain. 

En Hollande, Jean de Witt, Memoires, en 1C69. 

En Italie, Serra, Breve trattato delle cose che possono far abondare li regni 
d’oro, en 1613. — Genovesi, Lezioni di econom. civile, en 1764. — Muratori, 
Felicity pub., cap. 16, sul principio. — Corniani, Reflez. sul le monete. 

En France, le cardinal de Richelieu et Colbert, ordonnances et regie- 
mens pendant leur administration. 

* Thomas Culpeper’s useful remark on the mischief of an high national 
interest, en 1641. — Josias Child, brief observations concerning trade and 
interest of money, en 1651. — Samuel Lamb-For Banks and lumber houses, 
en 1657. — William Patterson, auteur du Projet de la banque de Londres, 
en 1694, et Barnard, dans ses Discours sur la reduction de l’interet de l’ar- 
gent, en 1714. 

t Physiocratie. 

f Richesse des nations, liv. 11. chap. 3. — David Hume peut avoir donned 
Adam-Smith l’idee de ce systeme. II dit litteralement que les homines ne 
peuvent acquerir que par le travail. (Essai sur le commerce, edit. d’Edim- 
bourg, 1804, in 8vo. vol. I. page 277.) 

§ Ibid., tome II. page 231. 

|| Addition aux quatre premieres editions de l’Essai sur la population, 
chap. 11. 

H Ibid. 

** Id. } tome I. page 53. 


NOTES. 


391 


D. Page 18. 

Adam Smith here admits, to a certain extent, the correctness of 
the general notions concerning the nature and office of money, 
entertained by the school of political economists who preceded Hume. 
Had he done otherwise he would have acted very unfairly, for his 
own reasonings, on this subject, are sometimes little more than a 
repetition of theirs, as might be shown by an examination of parallel 
passages. Compare, for instance, the two following. “ Although 
they who have their estates in money are said to be a great number, 
and to be worth <£5,000 or £10,000 per annum, more or less, which 
amounts to many millions in all, yet are they not possessed thereof 
altogether at once, for it were vanity or against their profit to keep 
continually in their hands above £40 or £50 in a family to defray 
necessary charges. The rest must ever run from man to man in 
traffic for their benefit, whereby we may conceive that a little 
money (being made the measure of all our other means) doth rule 
and distribute great matters daily to all men in their just propor- 
tions.”* * * § “ As the same guinea which pays the weekly pension of 
one man to day, may pay that of another tomorrow, and that of a 
third the day thereafter, the amount of the metal pieces which 
annually circulate in any country must always be of much less value 
than the whole money pensions annually paid with them.” f 

The more recent followers of Adam Smith have not always done 
the earlier writers equal justice. Thus Mr. McCulloch, in his Princi- 
ples of Political Economy, asserts that the mercantile system, of which 
he esteems Mun one of the earliest and ablest defenders, reckoned 
money the only wealth, and remarks, that “ the simple consideration, 
that all buying and selling is in reality nothing more than the barter- 
ing of one commodity for another, — of a certain quantity of corn or 
wool, for example, for a certain quantity of gold or silver, and vice 
versa, was entirely overlooked.” Now instead of considering 
money as the only wealth, Mun, on the contrary, says, “ they that 
have wares cannot want money; — neither is it that money is the 
life of trade as if it could not subsist without the same: for we 
know that there was great trading by way of commutation or barter,, 
when there was little money stirring in the world.” \ That the 
true use of money is its affording a fixed standard for the price of 
other things, is a doctrine, indeed, laid down by Bodin a century 
earlier than Mun. “ Car si la monoye, qui doit regler le prix de 
toutes choses est muable et incertaine, il n’y a personne qui puisse 
fair estat au vray de ce qu’il a; les contracts seront incertains les 
changes taxes gages, &c. incertaines.” &.c.§ The real error of 
those writers was their transferring to national wealth the rules 
which apply to individual wealth ; it was I apprehend, therefore,, 
the same in kind as I have hinted in the text, as that of Adam 
Smith himself, though different from it in degree. 

* Mun, p. 52, 12rao. edit., he published in 1664. 

t Wealth of Nations, B. II. c. ii. 

X Ibid. p. 24. 

§ De la Republique, liv. VI. 


392 


notes. 


E. Page 87. 

“ Outils ou instrumens de metier. Jamais mot n’a repu une ac- 
ception plus etendue que celle que je voudrais donner ici au terme 
d’outils, car je desirerais y comprendre depuis la fronde dont se 
sert le chasseur sauvage jusqu’a la machine la plus vaste, jusqu’au 
mecanisme le plus complique, jusqu’aux etres animes memes qui 
facilitent le travail de l’homme. L’enclume du forgeron et le metier 
pour faire des has, les aiguilles de la lingere et les pompes a feu, 
les navires et les betes de somme et de trait; en un mot, tout pro- 
duit materiel de la nature et du travail, tout objet vivant ou inanime 
que l’homme emploie pour s’aider dans son travail industriel, voila 
ce que j’appelle outils, instrumens de metier. Ce mot, dans son 
sens le plus etendu, n’exclut que les constructions.” * Storch, vol. 
I. p. 231. 


F. Page 153. 

“ Memorial dans lequel ou propose a PEmpereur un moyen de 
secourir le peuple dans les annees steriles.” ( Lettres Edifiantes, 
Tom. XI. p. 427.) 

Lieou-que-y, (the Mandarin who memorializes,) after narrating 
the miseries suffered from famine in the province Chansi, from 
which he dates, and stating the insufficiency of the ancient provi- 
sions of the empire, which suppose a quantity of rice to be stored 
up in the imperial magazines, sufficient for all emergencies, but 
which are neglected by the superior Mandarines, from the multi- 
plicity of the affairs they have to manage, or abused by their de- 
pendents, and which are, in fact, regarded as obsolete; proceeds 
to state his own scheme for obviating, in future, similar calamities. 

“ Ne seroit-il done pas a propos de profiter de ce temps d’abon- 
dance pour remplir de grains les greniers publics, en les payant de 
P argent tire du tresor de votre majeste ? par exemple, supposons que 
pendant cinq ans on y prit chaque annee quatre cent mille francs, 
destinees a ces provisions pour soulager le peuple dans les besoins 
pressans. On emploira d’abord cent mille francs pour reparer les 
anciens magazines de Tay-quen, capital de la province, pour en 
batir de nouveaux, et pour amasser du riz, afin d’assister dans le 
temps de sterilite le territoire de cette ville, de Fuen-tchou et autres 
lieux qui n’en sont font eloignes. Du cote du midi est la ville de 
Ping-yang, de King-tcheou, et autres endroits circonvoisins. La 
grande ville de Laugan est situee vers Poccident; en y faisant la 
meme depense, ou sera en etat de distribuer du riz a Ke-tcheau, a 
Leao-tcheau, et autres villes subalternes de sa dependance. Enfin 

* u Poufquoi les exclure ? Les constructions sont des produits de l’industrie 
humaine consacres a la reproduction ; partant ce sont des outils. Un champ 
lui-meme est un outil qui ne differe des autres qu’en ce qu’il n’est point un 
produit de l’industrie, mais un don de la nature.” J.-B. Say. 


NOTES. 


393 


de semblables magasins qu’on etablira dans la ville de Tai-tong, qui 
est an nord pourront aider a la subsistence des petites villes de Long- 
pin Kingvou, et autres semblables. Ce sont la les quatres princi- 
ple 3 villes de la province, on seront places les magasins generaux, 
etd’ou les grains se repandront dans les lieux qui en auront besoin.” 

He next mentions the precautions he conceives necessary to guard 
against malversation. “ Or apres des precautions si necessaires, 
supposons que, de la liberalite de votre majeste, il soit donne cette 
annee a chacun de ces villes cent mille francs pour capital: si 
l’annee est abondante, on peut, de ces cent mille francs, acheter 
au moins trente mille grandes mesures de riz, lequelles multipliees 
par quatre, feront, dans les quatres villes, cent vingt mille mesures. 
Depuis la recolte jusqu’a la fin de P annee le prix du riz est mediocre ; 
ce n’est que dans le printemps qui le prix commence a augmenter, 
alors on ouvrira les magasins, et on vendra ce riz. De cette vente 
on aura deux avantages; l’un est qu’en mettant Pabondance, on 
empechera que le prix du riz ne croisse trop : P autre, que le vendant 
alors un peu plus cher qu’i'l n’a ete achete dans le temps de la 
recolte, on sera en etat, au moyen de ce profit, d’acheter apres la 
nouvelle moisson au moins dix mille mesures de riz dans chaque 
endroit, de plus qu’on n’en avait l’annee precedente. Par-la, l’an- 
cien riz sort des greniers, et le nouveau le remplace. II sort a un 
prix plus cher et rentre a bon marche. N’est-ce pas un excellent 
moyen de multiplier ce riz, en soulageant meme le peuple? car on 
ne pretend pas s’enrichir aux depends du public. Ce riz tire des 
magasins sera vendu au cours et a un prix raisonnable, quoique 
plus cher qu’il n’etait huit mois auparavant. Rien de plus juste 
et de plus utile dans les annees abond antes. Par cette conduite, 
le riz chaque annee se multiplie dans la magasin ; et si pendant 
cinq annees il se fait une abondante recolte, la provision d’un en- 
droit, qui n’etoit d’abord que de trente mille mesures, peut se trou- 
ver a la cinquieme annee de plus de quatre cent mille mesures de 
riz. En cas de necessite, n’est ce pas deja un excellent moyen de 
so.ulager toute une provence ? * * * dans les disettes ordin- 

cires, le rix sera vendu a un juste prix. Dans celles qui passeront 
un peu l’ordinaire, on en pretera au peuple, et dans les grands ne- 
cessities on le distribuera par aumone.” Tiree de la Gazette Pub- 
lique par le R. Pere Contancin. 

The inhabitants of the island of Trong-ming often enter into 
voluntary associations, which have for their object the relief of some 
individual whose affairs have become deranged. They give him 
the means of reestablishing himself in a way which they conceive 
burdens them a little, though not very much. The association con- 
- sists of seven individuals, including the person for whose relief it is 
formed. The principle of it will be understood from the following 
table. 


50 


394 


NOTES. 


First year. 


Second year. 


The first, that is, the 

person for 

The first gives 

15 

whose benefit the company 

is formed, 

second receives 

60 

receives 

60 pistols : 

third gives 

13 

The second gives 

15 

fourth 

11 

third 

13 

fifth 

9 

fourth 

11 

sixth 

7 

fifth 

9 

seventh 

5 

sixth 

7 



seventh 

5 



Third year. 


Fourth year. 


The first gives 

15 

The first gives 

15 

second 

13 

second 

13 

third receives 

60 

third 

11 

fourth gives 

11 

fourth receives 

60 

fifth 

9 

fifth gives 

9 

sixth 

7 

sixth 

11 

seventh 

5 

seventh 

5 

Fifth year. 


Sixth year. 


The first gives 

15 

The first gives 

15 

second 

13 

second 

13 

third 

11 

third 

11 

fourth 

9 

fourth 

9 

fifth receives 

60 

fifth 

7 

sixth gives 

7 

sixth receives 

60 

seventh 

5 

seventh gives 

5 

Seventh year. 


Seventh year. 


The first gives 

15 

fifth 

7 

second 

13 

sixth 

5 

third 

11 

seventh receives 60 

fourth 

9 




Although the sum paid by each of the associates is unequal, and 
that the first disburse more each year than the last, yet the Chinese 
think that the conditions of the contract are much more favorable 
for the former than for the latter, because they sooner receive the 
sum of sixty pistols, and the great profits they derive from commerce, 
well indemnifies them for the advances they have to make. Letter 
of Father Jacquemin. Lettres Edifiantes, Tom. X. p. 127. 

I subjoin a few extracts from different authors, indicative of the 
strength of the accumulative principle in China, of the orders at 
which instruments remain there, and of some other circumstances 
in the condition of that empire, which I have referred to in the 
text. 

“ The spirit of gain, by working on an extensive plan, and by 
new methods, for supplying multitudes with particular articles, is 
not prevalent among the Chinese, unless in large or maritime towns. 
Some there are, however, in almost every village, who seek to ac- 
cumulate wealth by taking advantage of the wants of the people 
around them. Shops for lending money on pledges are common 
every where. Very high interest upon loans is allowed by law. 


NOTES. 


395 

The practice of such loans implies, certainly, great improvidence 
in the multitude, or great uncertainty in the success of their pur- 
suits. The facility of culture, and the abundance of crops, when 
no calamity intervenes, enables them in many places to bear such 
burdens, though often in a very impoverished condition.” Staun- 
ton , vol. 11. p. 244. 

“Pawn-brokers shops are as numerous in Chinese cities as in 
London.” Ellis ’ Embassy , p. 120. 

“ L’usure qui regne parmi les chinois est un autre obstacle bien 
difficile a vaincre. Lorsqu’on leur dit qu’ avant que de recevoir 
le bapteme, ils doivent restituer des biens acquis par ces voies illi- 
cites, et aussi ruiner en un jour toute leur famille, vous m’avouerez 
qu’il faut un grand miracle de la grace pour les y determiner.” 
Lettres Ediftantes, Tom. X. p. 379. 

“ La deuxieme cause de la disette n’est pas seulement, comme 
on se persuade, la multitude du peuple Chinois; j’avoue qu’ elle y 
contribue beancoup ; cependant je crois que la Chine fournit des 
grains suffisamment pour la subsistence de tous ces habitans ; mais 
c’est qu’on ne menage pas assez les grains, et qu’on en fait une 
consommation etonnante pour fabriquer du riz et de l’eau-de-vie 
ou de la raque. * * * * c’est sourtout le soir avant que de 

se coucher qu’ils en font usage, principalement le marchands, les 
artisans et les soldats. Ils ont chacun dans la chambre ou ils cou- 
chent un fourneau a charbon de pierre ou ils font cuire le riz, le 
the, et chauffer cette sort de boisson ; ils la prennent en mangeant 
des herbes salees, et s’enivrent a peu de frais. Si par megarde, 
ou etant a moitie ivres, ils lalssent tomber de cette raque dans le 
feu, la flamme s’eleve bientot ju^qu’au plancher, qui n’est fait que 
de nattes d’osier ou de chassis de papier, et dont la hauteur n’est 
fait que de trois ou quatre pieds au dessus de la tete d’une homme. 
Alors dans un instant, toute la chambre est en feu ; et parcque les 
bontiques ou couchent les marchands et la plupart des maisons du 
peuple, ne sont pas separees de leur voisons par des maitresses 
murailles, et que souvent les charpentes sont lies ensemble, le feu 
s’etend avec rapidite et fait des grands ravages avant qu’on ait pu 
l’eteindre. 

“ Ajoutez a cela que l’usage trop frequent de cette boisson fait 
mourir quantite de menu peuple d’une maladie qu’on nomme ye- 
che a la quelle on n’a pu trouver aucun remede. 

“ Si la dissette n’eclaircissoit pas de temps en temps ce grande 
nombre d’habitants qui contient la Chine il seroit difficile qu’elle 
put subsister en paix. II n’y a point de guerre comme en Europe, 
ni de pertes ni de malidies populates ; a peine en voit-on dans un 
siecle.” Lettres Edijiantes , vol. XII. p. 200. 

Many circumstances might be adduced, to show that it is not so 
much the want of power to accumulate, as the want of a desire to 
accumulate sufficiently strong to prompt to effective action, which 
prevents individuals in the lower classes in China, from rising to 
opulence. Of these I might mention the number of eating-houses, 
and the goodness of their fare, and the occasional richness of the 
attire of the common people, as described by recent travellers. I 


396 


NOTES. 


prefer, however, citing an anecdote from the “ Lettres Edifiantes,” 
as these are piobably less known to the reader. 

<£ Un vieillard vient le trouver ” (le missionaire) “ pour lui repre- 
senter Fextreme desir qu’il avoit que Fon construisit une eglise dans 
son village. Votre zele est louable, lui dit le missionnaire, mais je 
n’ai pas maintenant de quoi fournir a une pareille depense. Je 
pretends bien la faire moi-rneme repartit le villageois. Le mission- 
naire, accoutume a le voir depuis plusieurs annees mener une vie 
tres-pauvre, le crut hors d’etat d’accomplir ce qu’il promettoit; 
il loua de nouveau ses bonnes intentions, en lui representant que 
son village etant tres-considerable, il y falloit batir une eglise aussi 
grande que ceJle qui etait dans la ville voisine ; que dans la suite il 
pourrit y contribuer selon ses forces ; mais que seul il ne pourrit 
suflire a de si grands frais. Excusez moi, reprit le paysan, je me 
crois en situation de faire ce que je propose. Mais savez vous, 
repliqua le pere, que pour une pareille entreprise, il faut au moins 
deux mille ecus? Je les ai tout prets, repondit, le vieillard, et si 
je ne les avait pas, je n’aurois garde de vous importuner par une 
semblable demande. Le pere fut eharme d’apprendre que ce bon 
homme, qu’il avoit cru fort pauvre, se trouvat neanmoins avoir 
tant d’argent comptant, et qu’il voulut l’employer si utilement. 
Mais il fut bien plus surpris, lorsqu’ ayant eu la curiosite de de- 
mander a ce villageois comment il avoit pu se procurer cette som- 
me, il repondit ingenument que depuis quarante ans qu’il avait 
concu i ce dessein, il retranchait de sa nourriture et de son vete- 
ment tout ce qui n’etoit pas absolument necessaire, afin d’avoir, la 
consolation avant de mourir de laisser dans son village une eglise 
elevee a l’honneur du vrai Dien. Yol. XII. p. 363. 

To these extracts I am induced to add the two following, as 
strikingly illustrative of the strange contrasts which the morality of 
the Chinese exhibits. 

“ This dominion is tempered,” (that of husbands over their wives) 
“ indeed, by the maxims of mild conduct in the different relations 
of life, inculcated from early childhood, amongst the lowest as well 
as the highest classes of society. The old persons of a family live 
generally with the young. The former serve to moderate any 
occasional impetuosity, violence, or passion of the latter. The 
influence of age over youth is supported by the sentiments of nature, 
by the habit of obedience, by the precepts of morality engrafted in 
the law of the land, and by the unremitted policy and honest arts 
of parents to that effect. They who are past labor, deal out the 
rules which they had learned, and the wisdom which experience 
taught them, to those who are rising to manhood, or to those lately 
arrived at it. Plain sentences of morals are written up in the com- 
mon hall, where the male branches of the family assemble. Some 
one, at least, is capable of reading them to the rest. In almost 
every house is hung up a tablet of the ancestors of the persons then 
residing in it. References are often made, in conversation, to 
their actions. Their example, as far as it was good, serves as an 
incitement to travel in the same path. The decendants from a 
common stock, visit the tombs of their forefathers together, at stated 


NOTES. 


397 

times. 1 his joint care, and indeed other occasions, collect and 
unite the most remote relations. They cannot lose sight of each 
other ; and seldom become indifferent to their respective concerns. 
The child is bound to labor and to provide for his parents mainte- 
nance and comfort, and the brother for the brother and sister that 
are in extreme want, the failure of which duty would be followed 
by such detestation that it is not necessary to enforce it by positive 
law. Even the most distant kinsman, reduced to misery by accident 
or ill health, has a claim on his kindred for relief. Manners, 
stronger far than laws, and, indeed, inclination, produced and nur- 
tured by intercourse and intimacy, secure asistance for him.” 
Staunton’s China , vol. 11 . p. 21. 

“ The frail females in the boats had not embraced this double 
occupation, after having quitted their parents, or on being, abandon- 
ed by them on account of their misconduct ; but the parents them- 
selves, taking no other interest in the chastity of their daughters, 
than as it might contribute to an advantageous disposal of them to 
wealthy husbands, feel little reluctance, when no such prospect 
offers, to devote them to one employment,” (that of conveying pas- 
sengers in boats) “ with a view to the profits of another.” (of prosti- 
tution.) Ibid. p. 328. 


i 


G. Page 193, 251. 

According to the view of banking given in the text, it is an art 
which time, and what we call chance, have wrought out of the cir- 
cumstances of European society, and the use of which is to quicken 
the exhaustion of instruments, by facilitating exchanges. But, 
according to this view of the subject, the consideration of two cir- 
cumstances generally combined with banking transactions, is omit- 
ted. The business of banking has been very often combined with 
the payment and receipt of the revenue of the state. Whatever 
the government receives, in lieu of the precious metals, or other 
commodities, in payment of the imposts it levies, will have the 
value of that, for which it is taken in exchange. Government may 
so give the value of the precious metals to paper, or any other mate- 
rial, and, for its own convenience, may circulate the money which 
it in this manner issues through the medium of a bank. Thus the 
Bank of England may be said to be founded on the transactions of 
this sort, of the British government. This is, however, a circum- 
stance by no means necessarily connected with banking. Indeed, 
I think there is reason to believe, that, from the great fluctuations 
thus introduced into what is called the money market, by the mag- 
nitude of the transactions of the state, the union of the two, when 
it takes place, operates injuriously on the general system of ex- 
change of the country. 

The other circumstance to which I allude, is the exchange of 
the precious metals between different countries. Banks, as the 


398 


NOTES. 


great dealers in these metals, are necessarily exposed to the incon- 
venience of having to provide a supply for the demands occasioned 
by fluctuations in the business of different countries. Although, 
however, this circumstance is always more or less intimately con- 
nected with the business of banking, it is not necessary for our 
purpose to examine the effects resulting from it. 

We may confine our attention, therefore, altogether to the con- 
sideration of the art, as a means of facilitating exchanges within 
any society. A brief statement of its condition in Scotland, a 
country in which, to judge from the circumstances attending its 
introduction, and the practical benefits arising from its operation, 
it has probably arrived as near perfection as any where, may suffi- 
ciently serve the purpose of showing the manner in which the mode 
of its operation may be explained by the principles I have endea- 
vored to develope, and how it seems to attain the power of commu- 
nicating the advantages it is capable of bestowing, and of avoiding 
the evils to which it is sometimes liable. The Scotch banking 
system is also better fitted for an example, both as it was the one 
directly presented to the observation of Adam Smith, and from 
which, accordingly, his ideas on the subject seem to be chiefly 
taken, and because it is not directly connected with the issue of 
government paper, or with the passage of coin or bullion from 
country to country. 

Banks in Scotland are both what are termed banks of deposit, 
and of circulation. They are the receivers and transferrers of the 
money, or what is equivalent of the capital of others, and they are 
issuers of paper money of their own. Their business is confined 
to what is the proper occupation of bankers, transactions springing 
from the exchanges effected through the medium of credit. They 
avoid, therefore, to grant loans, unless for the purpose of facilitating 
exchanges. Previously, however, to examining the operation of 
the system, it may be well to direct our attention to the circum- 
stances of the parties with whom bankers have to deal. 

When, in consequence of the business of banking being estab- 
lished on a sure basis, in any community, the system of credit 
comes extensively to prevail, the owners of the whole stock of the 
society are divided into two classes, the one consisting of those 
having in their possession a greater stock of instruments than what 
actually belongs to them, the other having a less stock than what 
belongs to them. The larger proportion of the owners of stock, 
belong sometimes to the one, sometimes to the other class, but the 
circumstances of many place them permanently in the one or the 
other. 

Individuals engaged in the forming, transporting, and exchanging 
of instruments, the farmers, manufacturers, and merchants of the 
community, have occasion to employ in their different businesses, 
sometimes a larger, sometimes a smaller stock of instruments or 
capital. At one time, . for example, the state of the land the 
farmer cultivates, requires a great outlay for seed-corn, for tilling, 
and manuring it, and for wages paid to laborers. At another time 
the returns from it in the shape of grain, fat cattle, and other instru- 


NOTES. ' 


399 


ments and commodities are proportionally great. At the former 
period the farmer may not have a sufficient stock of his own, and 
may wish to borrow certain instruments, at the latter he is in a 
condition to lend. In a similar manner, the fluctuations of busi- 
ness render a merchant sometimes a borrower, sometimes a lender. 
For example, two merchants in Great Britain are engaged in the 
timber trade, the one in that carried on with Prussia, the other in 
that with Canada. A change takes place in the business, from the 
duty on Prussian timber. being lessened. The Canadian timber 
trade being thus no longer profitable, the merchant whose capital 
was embarked in it, withdraws it from it. He employs a portion 
of it in an experimental adventure to Prussia, but the larger part 
he has no immediate use for, and is, therefore, in a condition tn 
lend to others. On the other hand, the merchant who had been 
accustomed to trade to Prussia, knowing the details of that business* 
and having a correspondence established there, is able to employ 
with advantage a much larger capital than he possesses. He wishes, 
to borrow instruments, that is, commodities to export to Prussia, 
and to have the use of ships for the double transport. Fluctuations, 
such as these, and innumerable others, occasion continual variations 
in the stock which every merchant, or other individual engaged in 
any sort of business, is capable of employing with advantage. 
Sometimes, therefore, the business of every one is expanded much 
farther than his own stock would permit, at other times it is con- 
tracted into so narrow limits, as not to give employment to the 
whole of it. 

Again, in every society there are many individuals who cannot 
themselves employ the instruments they own. A merchant, for 
example, dies, leaving a large stock of instruments of one sort or 
other to his widow, and young children. These they cannot em- 
ploy. They must either convert them into cash, which, placing in 
security, they may gradually expend as their occasions require, or 
they must lend them to others who will pay for their use. On the 
other hand, young men of ability, who have been bred to any busi- 
ness, although, perhaps, they may have very little or no capital, may 
yet be able to put instruments with which they may be entrusted, to 
so active use, that they may yield more than the ordinary returns, 
and so, after paying for the usual profits, may leave a considerable 
surplus as the reward of their exertions. 

The Scotch system of banking seems well calculated for admit- 
ting the easy passage of indiviuals from the one to the other class. 
Its distinguishing characteristic is that the banker allows interest 
on all sums deposited, from the moment of deposit, and that, on 
sufficient security, he is always ready to grant the loan of as small, 
or as large an amount, as may be required. When he lends to 
individuals, by discounting bills, or by what are termed bank 
credits, he becomes the real owner of a proportional amount of the 
stock of instruments they hold, and in this way may be said to be 
the owner of a part of the general stock of instruments of those 
dealing with him, equal to the amount of what he has lent. In 
reality, however, it is not altogether he who owns them, but rather 


400 


NOTES. 


they who have given him the larger part of his funds in the shape 
of deposits. These have all come to him with money in the form 
of coin, of paper money of other banks, or of his own money', or of 
an order for his own money, and in place of it have been content 
with a pledge that it shall be returned on demand, and that in the 
interim interest will be allowed on it. By this arrangement the 
banker, in effect, transfers to them a portion of his claims on the 
instruments held by those who are debtors to him, and part of his 
right to a portion of the returns made by them. Thus, while the 
merchant formerly trading to Canada, instead of employing the 
money he receives for sales of his existing stock of timber in pur- 
chasing other goods, and in freighting' other ships for that market, 
pays it into the bank, the merchant trading to Prussia is drawing 
money out of the bank, for the purpose of extending his trade with 
Prussia. The effect produced is, in so far, similar to that which 
would have resulted from the Canadian trader lending part of his 
capital to the trader to the Baltic. It differs from such a transac- 
tion, however, in three respects : 1st. These two individuals might 
be unknown to each other, and might have no means of ascertain- 
ing their respective plans; 2d! The merchant trading to Canada 
would probably have either less or more spare funds, than the mer- 
chant trading to Prussia required; 3d. He might, also, probably, 
have occasion to call for them, for his own purposes, at a time when 
it might be inconvenient, or impossible, for the other to replace 
them. The banker, on the contrary, is always ready to receive or 
to lend. 

Throughout all the occupations carried on by the different 
members of the community, similar circumstances occur. One 
tradesman, or mechanic, is laying by funds for building a dwelling 
house, another is expending all the funds he has laid by, and, per- 
haps, borrowing a little more, for the purpose of finishing a dwell- 
ing house. While the farmer is depositing in the bank some part 
of the proceeds of his sales of grain and cattle, the corn merchant 
and the butcher are drawing funds from the bank, for the purpose 
of assisting them to purchase these commodities. 

It will thus be found, that the person making the deposit, is one 
who has just transferred to others, who can employ them at the 
moment to more advantage than he, some instruments which he 
held, and that in return he receives a claim to that amount, on the 
funds of the bank, and of interest on it till paid. Those funds, 
however, consist chiefly of debts, owing to the bank by the commu- 
nity at large, and that interest is drawn from the profits arising from 
the stock of instruments effectively owned by the bank, and lent by 
it to the individuals with whom it deals. Hence the person making 
the deposit is one having transferred a part of his stock of instru- 
ments to an individual, and receiving in lieu of it a share of the 
claim of the bank, on the general stock of instruments owned by 
those indebted to it. In this way the bank may be considered as a 
broker negociating between those, the condition of whose business 
requires them to borrow, and those, the condition of whose business 
disposes them to lend, and generalizing the transactions of both. 


NOTES. 


401 


It is not by any means, however, merely a broker. Besides the 
fluctuating deposits, it has a large capital of its own embarked in 
the business. This is chiefly owned by individuals whose circum- 
stances place them permanently in the class of lenders, persons 
retired, or retiring from active business, or widows, &c., who, 
selling off their stock, employ their funds in this manner. 

This system probably yields as many advantages as any hitherto 
discovered, and avoids, as well as may be, the chief evils to which 
the business of banking is subject. 

1. By means of it all possible exchanges are made at the least ex- 
pense ; and with the greatest facility. Every person is prompted to 
sell because the money he receives yields an immediate return. 
Every person having it in his power to turn any commodity to good 
account, has the means afforded him of obtaining possession of it. 

2. The capital which bankers own, or hold, is liable to be embarked 
and lost by them in imprudent speculations; or, through partiality, 
to be lent to a few individuals who may squander it in the same 
manner. This seems to be best guarded against by there being 
many stock holders, and a large capital. In the banks to which 
we refer, this is generally, though not always the case. 

The knowledge which the banker acquires, by means of the sys- 
tem of bank credits, of the state of the affairs of those dealing with 
him, is probably somewhat greater than can be obtained by the 
mere discount of bills. It gives him the sort of information, which 
one would acquire of the affairs of another, by having the care of 
his purse. I believe, also, that persons dealing with the Scotch 
bankers, are somewhat more strongly excited than those dealing 
with other bankers, to vigilence in providing funds to meet positive 
engagements with them, as the slightest failure of any individual 
in any such transaction, occasions his sureties being called on to 
pay up his cash account, ruins his credit, and renders it impossible 
for him to continue his business. It is probable, therefore, that 
this system has considerable efficiency in checking rash and impru- 
dent speculations, by withholding funds from those most likely to 
run into them. 

3. The large amount of stock subscribed, and the subscribers 
being severally responsible to the amount of all the property they 
possess, give so great confidence in the stability of the banks, that 
nothing but some very great revolution in the affairs of the society, 
or some great convulsion in the money market, would be sufficient 
to shake it. Owing to the system pursued, the possibility of any 
great disturbance of the money market is prevented. This forms 
the fourth circumstance to be noted. 

4. I have observed in the text, that, when any reverse happens to 
the trade of a community, the diminution of sales which is the con- 
sequence of it, while it renders it necessary for those, whose busi- 
ness, as compared with their capital, is much expanded, to borrow 
money to meet the engagements which they have entered into, 
gives a redundancy of money to those whose business, as compared 
with their capital, is small, and who have contracted to receive a 
great amount of money, and to pay only a small amount. 


NOTES. 


402 

According to the system of banking which prevails in England, 
and in most countries, all individuals in the latter class will have a 
greater or less amount of cash lying by them useless. They are 
afraid to lend it, owing to the prevailing embrrassments, and, where 
the banker allows no interest on money deposited with him,. they 
have no particular motive to induce them to lodge it in any bank. 
But, when a person intends to keep money lying by him, he will 
be apt to prefer coin, to paper, the former is the securest of any 
sort of property, the latter may possibly be insecure. He will more 
especially be inclined to prefer the former, if he have the least sus- 
picion of the stability of the bank issuing the paper. It is thus 
that, at such seasons, what are called runs upon particular banks, 
are very apt to arise, and both to bring ruin on the bank, and in- 
crease the general embarrassment. But wherever, as in Scotland, 
the banker allows interest on all sums deposited, no one thinks of 
keeping money by him. The very classes, too, it may be remarked, 
who are most apt to commence these runs, petty shop-keepers and 
tradesmen, have in Scotland, in general, bank credits, and are con- 
tinually striving to put as much money into the bank with which 
they deal, as the necessity of their business will permit. In Scot- 
land, therefore, the banks, owning greatly, no doubt, to the guar- 
antee of a very large capital prudently managed, but, also, as I 
conceive, in no inconsiderable degree, to the tendency of the sys- 
tem to bring into them all the spare funds of the society in the shape 
of deposits, have not for fifty years been exposed to any dangers 
or inconveniences of the sort, and in the midst of the severest com- 
mercial distress, and the ruin of the banking establishments of the 
sister kingdom, have always maintained their course steadily, and 
been able to apply the resources of the community to carry those 
through the crisis, whose embarrassments had arisen, not from the 
bankrupt state of their affairs, but from the pressure of the times.* 

5. Banks have very often issued an overabundant supply of their 
particular money, and it has been depreciated. An effectual reme- 
dy for this, one would be inclined to conceive, would be their being 
obliged to convert it, on demand, into gold or silver. Many per- 
sons, however, do not think that this is sufficient, and believe, that, 
notwithstanding, an over issue may take place. If so, the Scotch 
system, by its tendency to return on the bank all money not in im- 
mediate use, would seem to be a pretty effective check on the 
occurrence of such an evil. 

Banking may be fitly described, as a generalization of individual 
credit transactions. Every system of banking generalizes them to 
a greater or less extent. The more complete the generalization, 
the more completely does the system perform its functions, and the 
nearer it comes to the perfection of art. The Scotch system, 
viewed as an art of this sort, seems to discharge its function well. 
Whatever spare capital the turns of business may there throw into 
any individuals hand, he finds it for his advantage to place in the 

* See the correspondence between Lord Liverpool and the Chancellor of 
the Exchequer and the Bank of England, in 1826, in Hansard* Debates. 


NOTES. 


403 

bank, whatever additional capital they may require of him, he 
easily procures from the bank. The facility with which it operates 
may be best seen, by contrasting it with the English system. 

In England, an individual dealing with a banker, is expected 
to leave in his hands an amount of capital as a deposit, for which 
he receives no interest. It is from this that the profit of the banker 
is derived. When, therefore, a person in the course of business 
has a greater portion than usual of unemployed capital, he finds 
there no immediate advantage in placing it in the bankers hands. 
He, therefore, probably, will not place it there so promptly, as he 
would in Scotland. The effect of this tardiness is more especially 
felt at those critical periods to which I have referred in the text, 
when, in consequence of a general decrease of the amount of sales, 
persons whose means have been most expanded, are under the 
necessity of borrowing to & larger extent than they had anticipated. 
If, on such occasions, they whose business has been contracted 
within narrower limits than their capitals would have admitted, 
and who, in consequence of avoiding to purchase, have a larger sur- 
plus capital than usual in their hands in the shape of money, retain 
it there, instead of placing it in the bank, the banker is restrained 
from making the advances he otherwise would, and a violent check 
is given to the operation of the credit system, sufficient to give a 
beginning to convulsions more extensively deranging it. 

This system, also, as compared with the English, adjusts itself 
with greater precision to the actual circumstances of the two great 
classes of the community, the lenders and borrowers, to whose 
transactions it serves as the instrument. When, in consequence 
either of the progress of accumulation, or of misfortunes befalling 
the industry of the country, instuments are placed in more slowly 
returning orders, and profits fall, borrowers should pay less, and 
lenders receive less, for the use of capital. And reversely, when 
profits rise, more should be paid by the one class, and more received 
by the other. This is naturally brought about where a certain rate 
is paid for funds deposited, as well as for those drawn. Under 
such a system the banker cannot afford to have any capital lying 
dormant. He must, therefore, preserve the proper proportion be- 
tween the funds deposited in his hands, and those drawn out of his 
hands. When the former become too great, which will be the case 
when trade is dull, he lowers the rate of interest which he charges 
his customers, and, also, that which he gives them, and thus dimin- 
ishes the amount deposited, and increases that drawn. He does 
just the reverse and produces directly opposite effects, when trade 
becomes more lively, and profits rise. In England, on the contrary, 
the state of trade has no direct effect on the interest which bankers 
charge, and the due proportion between borrowers and lenders is 
not so maintained.* 

The advantages derived from any system become apparent, by 
considering the consequences that would result from its being abol- 
ished, or from its actions being impeded. On this account I shall 


Joplin on Currency, p. 108. 


404 


NOTES. 


state three hypothetical cases, with regard to the system which we 
are now considering, as an example of the effects of banking in 
general. 

In the year 1826 it was proposed in the British Parliament, to 
enact a law putting a stop to the circulation of one pound bank 
notes, the chief money of Scotland. The bankers maintained that 
in this case they would no longer, carry on business. Let us sup- 
pose, that the proposal had been adopted, and that the effect had 
really been utterly to abolish the business of banking in that coun- 
try, and unless in barter, to make all buying and selling to be trans- 
acted in coin, either in ready cash, or in cash paid when the period, 
to which credit had been limited, expired. 

In considering the effects of such a change, we may divide all 
transactions now taking place in Scotland, and concerned in the 
question, into those effected by bank bills, or as they are termed, 
bank notes, and those effected by checks on some bank. 

1 . Of those now effected by bank bills, of which the majority are 
what are called one pound notes. Every purchaser, that is, every 
person in business, would be obliged to have continually lying by 
him, to answer occasional demands, a certain sum proportional to 
the extent of his business, and when preparing for some extraor- 
dinary occasion, for a length of time previous he would be collect- 
ing and hoarding up funds sufficient for the purchase or purchases 
he intended making. A large part of the money of the country, 
would, therefore, be constantly lying idle, doing nothing, but wait- 
ing for something to do. Let us suppose that we are in Scotland 
at the present moment, and that bank notes being able to hear and 
answer questions, we take at random a parcel of one pound notes, 
and interrogate them as to what their employment is, and how they 
discharge it. They would doubtless answer: “the service we 
render is to pass from hand to hand, for the purpose of making ex- 
changes.” “ Do you ever lie idle for anytime?” “No. Every 
one that gets hold of us immediately passes us to some other person, 
either to pay some debt, or to make some purchase, or if not, car- 
ries us to the banker, who sets us out again on the same round. 
Some times, indeed, we get a few days, or a few weeks rest, in the 
desk of a small country dealer, or some such person, who has to 
wait that time, perhaps, before he can collect a dozen of us to send 
to the bank, but this is seldom, and as it were by chance.” Let 
now the banks be done away with, and, instead of bank notes, let 
as have to ask the same questions of sovereigns. Their answer 
would be, “ we are employed in the service of people who collect 
us for the purpose of buying some thing, or things, with us, when 
the chance presents itself. We are lying continually idle, there- 
fore, for longer or shorter intervals, waiting till this chance cast up. 
Sometimes we are collected in money bags for weeks, sometimes 
for months, and unless when we get into the hands of very neces- 
sitous persons, we each of us expect to be put by in some place 
of security, along with others of our brethren, and with them to 
wait the chance of being called out to effect some exchange, after 
which we again return for a time to inactivity.” 


NOTES. 


405 

What in the supposed cases must be true of a particular set of 
bank notes, or a particular set of sovereigns, would be true of all 
bank notes, and of all sovereigns, and hence the amount of ex- 
changes effected in any particular year, by means of three and a 
half millions of bank notes, about the present circulation of Scot- 
land, must be far greater than would be effected in the same time 
under the suppositions we have made, by three and a half millions 
of sovereigns. The latter could not both be effecting exchanges, 
and lying idle. 

2. But, besides the exchanges made by means of bank notes, a 
great amount of exchanges are effected by orders or checks on the 
banker. Were there no banking system there in existence, these, 
also, would have to be effected by the medium of money, either 
ready money, or money paid after a certain time, but certainly, in 
some way or other, through the instrumentality of money. There 
would require, then, to be a farther provision of sovereigns, to effect 
the large amount of exchanges now managed by a few strokes of 
the pen of a bankers clerk. 

What would be the addition which these two circumstances 
would render it necessary to make to the circulating medium, in 
order to bring sovereigns to approximate in efficiency to the bank 
notes, the place of which they occupied, might be difficult to de- 
termine. The proportion of the one to the other, might be as 3 to 
2, as 4 to 2, as 6 to 2, or as 8 to 2, or perhaps still higher; it is 
very certain, however, that the one would be much greater than 
the other. After all, it would only be an approximation. As what 
will happen can only be conjectured, not known, every person 
engaged in business would occasionally err in his calculations, and 
would sometimes have commodities offered him which he would 
wish to purchase, but for want of cash would be unable to purchase. 
The two circumstances referred to, the additional expense of ex- 
changes, consequent to the additional money necessary to effect 
them, and the diminution of exchanges consequent to the want of 
the money necessary to effect them, united, would mark the direct 
loss the community sustained by the abolition of the banking sys- 
tem. The indirect loss would arise from the check given to the 
accumulative principle, by the diminished quickness of return ol 
instruments — by what would be termed the dulness of trade — and 
the diminished accumulation of stock consequent to it. 

But such a supposition as that we have made, could not possibly 
come to be a reality. When the art of banking has once been 
introduced into a country, the advantages resulting from it, are too 
great to admit of its being altogether abolished. There will always 
be some generalization of credit transactions, some recognized mode 
of transferring from hand to hand, promises to pay, made by one 
individual to another. The enactments of the legislator may act 
on the art so as to make it more or less effective, but they cannot 
prevent the practice of it. I shall, therefore, make another suppo- 
sition, and assume that the measure proposed having heen adopted, 
sovereigns took the place of bank notes, and that, notwithstanding, 
the banks continued their operations as before. 


406 


NOTES. 


In this case the banks, by the supposition, giving sovereigns out, 
and receiving them again, in tbe same manner as they had their 
own notes, the community in general would have been sensible of 
no other alteration but that of handling gold instead of paper, and 
they would have had the advantage of some additional security 
against the danger of the failure of the banks, and against disorders 
consequent on drains of gold from abroad. But this supposition, 
also, is inadmissible. The diminution of the paper money issued 
by the bankers, would have proportionably diminished their profits. 
The amount of one pound bank notes there circulating, being some- 
thing over two millions, their circulation would probably have been 
curtailed by the measure by nearly two millions. This at five per 
cent, is not much short of half of what they make by the whole 
funds deposited in their hands, which have been estimated at about 
twenty millions, and on which they gain one per cent., the differ- 
ence between what they chaige those who borrow from them, and 
which they give those who lend to them. Their profits must, 
therefore, have been greatly diminished by the measure, and unless 
we suppose that bankers in Scotland have more than the ordinary 
profits of stock, which, where there is so active a competition, can- 
not well be, capital would have been withdrawn from the business,* 
or the business would have undergone a change. It is probable 
that the latter circumstance would have happened. The banks 
would either have made more than one per cent, difference between 
what they allowed and what they charged for money, or, as is more 
likely, they would have changed the system of bank credits. The 
business of the small dealers, tradesmen and farmers, who have 
credit with the banks, is transacted mostly by one pound notes. 
Bank bills exceeding five pounds rarely pass into their hands. 
Under the supposition, therefore, this class would have circulated 
but very little of the bankers paper; he, consequently, would have 
declined granting them credit, in this way, and confined his credits 
of this sort to merchants and others, whose transactions being large, 
made them the circulators of the paper to the issue of which he was 
confined, and whose business, consequently would have been more 
profitable to him. The facility of exchange among the small dealers 
would have been greatly abridged, and through it, that among the 
whole community would have been somewhat lessened. The real 
amount of loss that would have been in consequence sustained, it 
is not necessary to our purpose to attempt to fix. Almost all per- 
sons practically acquainted with the business of the country, be- 
lieved that it would have been very considerable, and, in conse- 
quence of their urgent representation, the measure in contemplation 
was abandoned. 

* It may be observed, that there is a great difference between Great Britain 
and the United States in this respect, because in Great Britain the govern- 
ment funds afford an advantageous investment for the capitals of individuals, 
widows, &c., who in this continent are under a sort of necessity of placing it. 
in banks. In this, and in many other respects, as in the distance from other 
nations, and the increased difficulty in replenishing the stock of bullion when 
exhausted, the situation of the two countries is very different. 


NOTES. 


407 


If I have succeeded in placing clearly before the reader my ideas 
concerning this somewhat intricate subject, he will, I think, per- 
ceive, that there exists an essential difference between the nature 
and operation of the money of the banker, and those of other 
money. 

In communities where the art of banking has no existence, money 
may be defined to be a commodity, of which every person in the 
habit of making exchanges, keeps a supply by him, for the purpose 
of effecting them. 

In a community, again, where the art of banking has been estab- 
lished, as in the instance of Scotland, if we confine our attention 
to those who have dealings with the banker, the money he issues 
may be fitly described as counters which he gives them for the 
purpose of arranging their transactions with one another, and 
which they return to him immediately they are arranged, that they 
may be rated on his books according to the place they occupy as 
borrowers of part, or as owners of part, of the general funds which 
he holds. An individual who has a deposit in a bank draws from 
it, we shall say, the sum of .£1,000, and lessens by that amount 
the deposits in the bank, and for which it has to pay interest. But, 
of course, he intends to put it to some use, that is, to make some 
purchase or purchases with it, or pay for some before made. The 
person or persons to whom, for this purpose, he transfers it, by the 
supposition dealers with the bank, if they have no immediate use 
for it, will directly carry it to the bank, and then the general de- 
posits and loans of the bank will be the same as before, but the 
bank accounts of the particular depositors and borrowers engaged in 
the transaction will have suffered an alteration. If, on the other 
hand, any of those individuals, among whom the £1,000 is distri- 
buted, or all of them, have use for the sums they receive, that can 
only be to make some immediate purchases, or to pay for some 
before made. In this way, after passing through a less or greater 
number of hands, the £1,000 the banker had issued, finds its way 
back to him, and, as far as his business is concerned, he is exactly 
in the same situation as before he issued it. The situation of the 
person who took out the money, and that of them who return it, is 
altered. One holds a greater stock of instruments, and the debtor 
side of his bank account is proportionally greater, the others hold 
a less stock, and the credit side of their bank accounts are propor- 
tionably greater. The former has transferred a part of his claim 
on the general stock of instruments, and has in lieu of it the pos- 
session of some particular instrument or instruments, and the latter 
have done the reverse. The bank money, therefore, has merely 
served the place of counters, by aid of which the customers of the 
bank settle their tiansactions, and finally determine their relations 
to its stock. During the time these transactions were in progress, 
there was a proportional diminution in the amount of interest which 
the bank had to pay its customers, and, if the counters it gave them 
were merely pieces of paper costing it little dr nothing, this would 
be so much clear gain to. it ; if they were gold, the expense of pro- 
curing them would exactly balance the gain. 


408 


NOTES. 


If there be a plurality of banks, as the bankers in this case, ex- 
change their notes with one another, the series of transactions pro- 
duced are substantially the same, unless in so far as the business of 
one bank may be extending, that of another contracting, a circum- 
stance which is generally of little moment to the community. 

It is only when the banker’s money passes out of the range of 
those having transactions with him, that it comes to hold the place 
of other money. While it is in their hands, it performs the office 
that other money would, and in this respect, if it be paper money, 
he gains an advantage not directly springing from the exchanges 
managed by his funds. Individuals, however, who do not deal with 
any bank, where banking is properly managed, are persons whose 
affairs do not require them to keep money by them, and by the 
agency of both classes, it is, therefore, preserved in continual motion 
and employment. 

I have entered into a longer detail on this subject than I had 
intended, from my desire to make apparent the distinction stated in 
the text, in regard to the superior efficiency of the money which 
the banker puts into circulation, whether paper or gold, as com- 
pared with that which exists where the art of banking is unknown, 
and where there is either no generalization, or an imperfect gener- 
alization of transactions performed through the medium of credit. 

It will be seen, that the view I have attempted to give of the 
whole subject of exchange, is quite opposed to that exhibited in the 
Wealth of Nations. Adam Smith sets out from exchange, and 
makes it, and the division of labor consequent on it, the source of 
stock, whereas I have endeavored to show that exchange is the 
result of the increase of stock, and subsequent division of employ- 
ments, that the necessity for its existence is a circumstance retard- 
ing the increase of stock, and that the benefits of the art of bank- 
ing spring from the facility which that art gives to the process. 

As exchange may be said to be the commencement of Adam 
Smith’s system, and as money is the instrument of exchange, he 
assumes it as a first principle, that while the exchanges remain the 
same, the same amount of money is necessary to transact them. 
Bank paper, he, therefore, concludes, will exactly equal in nominal 
value the specie circulated before its issue. If it exceed this amount, 
it will return upon the bank, if it fall short of it, the vacancy will be 
filled by specie. This principle, which Adam Smith, as is observed 
by Mr. Say, has introduced into speculations on this subject, is 
thus epitomized by the latter author: 

“Taking it for granted, then, that the specie, remaining in cir- 
culation within the community, is limited by the national demand 
for circulating medium; if any expedient can be devised, for sub- 
stituting bank notes in place of half the specie, or the commodity, 
money, there will evidently be a superabundance of metal money, 
and that superabundance must be followed by a diminution of its 
relative value. But as such diminution in one place by no means 
implies a cotemporaneous diminution in other places, where the 
expedient of bank notes is not resorted to, and where, consequently, 
no such superabundance of the commodity, money, exists, money 


NOTES. 


409 


naturally resorts thither, and is attracted to the spot where it bears 
the highest relative value, or is exchangeable for the largest quantity 
of other goods; in other words, it flows to the markets°where com- 
modities are cheapest, and is replaced by goods, of value equal to 
the money exported.” Say, B. I. c. xxii. Am. edit. vol. I. p. 246. 

He goes on to prove that the national capital must be augmented 
by the specie exported, and fixes the utmost quantity by which it 
can so be increased, at one tenth of the annual product or revenue 
of the nation. 

Now I maintain, that to effect the same transactions, it requires 
far less bankers money, whether that money be paper or specie, 
than was required of the money in existence before the establish- 
ment of banks, the celerity of motion making up for the deficiencies 
of quantity, and that what Adam Smith asserts concerning the 
comparative efficiency of the two kinds of money circulated by 
consumers and dealers, holds true of that money of which the bank 
forms the centre of circulation, as compared with that, which, 
where there are no banks, circulates slowly and after intervals of 
inactivity between dealer and dealer, and that the one by “ a more 
rapid circulation, serves as the instrument of many more purchases 
than the other,” and, consequently, that if the same number of 
transactions only takes place after the establishment of banks, as 
before their introduction, then much less money will be necessary, 
and if the same money be circulated, the fact indicates, that a great 
addition has been made to the business transacted, and still more 
if the money circulated exceeds that formerly circulated. It is 
this last event, that, I conceive, generally takes place. In this, as 
in other instances of real improvements, the effect is contrary to 
what might have been anticipated, the greater facility in performing 
the operation bringing so much greater a compass of materials 
within its reach, that the occupation given to the art, instead of 
diminishing, increases, and by the subdivision of employments, 
and abandonment of barter, money comes to be so much more used 
as an instrument of exchange, that, on the whole, the quantity of it 
employed is augmented, in the same way, as when a road is much 
improved, though one horse may be sufficient to transport what 
three did before, yet the commodities transported so increase, that 
there are, notwithstanding, thrice the number of horses employed. 
This is especially the case in new countries, where, from causes 
specified in the text, money before the existence of banks is exces- 
sively scarce. 

If the reader have still any doubts on the subject, he may, I con- 
ceive, satisfy himself of the accuracy of this view, by reference to 
the pages of the “ Wealth of Nations ” itself. Adam Smith, by no 
means, limits the advantages of banking as practised in Scotland, 
to the substitution of paper for specie, and the direct fictitious capital 
thus created. On the contrary, he thinks that every person dealing 
with the banker, that is, every person engaged in business, derives 
individually very great advantages from the system. These advan- 
tages are resolvable into the circumstance, that every such person 
is free from the necessity of keeping any money by him. What* 

52 


410 


NOTES. 


ever demands are made on him he answers by means of his cash 
credit, or by discounting a bill, or bills. In this way “ partly by the 
conveniency of discounting bills, and partly by that of cash accounts, 
the creditable traders of the country are dispensed from the neces- 
sity of keeping any part of their stock by them unemployed, and in 
ready money, for answering occasional demands.” * Now it is 
certainly very remarkable, that it did not strike Adam Smith, that 
if all the creditable dealers in the community, that is, the great ma- 
jority of those who before the establishment of banks would have 
kept money by them, will by the facilities given by the art, be dis- 
pensed with the necessity of doing so, and can still carry on equally 
extensive transactions, the money requisite to transact the general 
business of the country must be diminished by that amount. If, 
for example, according to the estimate he makes, the specie in cir- 
culation in Scotland before the introduction of banking, was about 
one million sterling, after the establishment of that art, had the ex- 
changes effected remained the same, a much less sum than one 
million would have been sufficient to perform them, for all that 
money would have been useless which it had before been necessary 
to keep in the coffers of the different dealers, and which formed the 
great mass of the then circulating medium, or rather of the medium 
through the intervention of which exchanges were transacted. If, 
then, a million had been still employed, — if a million of the bankers 
paper had superseded a million of coin, — it would have indicated, 
as I have stated in the text, a great increase in the transfers effected, 
and would have shown, either “ that a larger compass of materials 
had been brought within reach of the accumulative principle, or 
that employments had been more subdivided, or that both circum- 
stances had occurred.” f 

According to Adam Smith, the bank saves each dealer from 
keeping by him in ready money, all that amount which it advances 
him by means of the cash account it opens with him, or by dis- 
counting the bills he presents, What in this way, then, all the 
banks advance to all the dealers, deducting from it the amount of 
paper circulated, must be so much which they save them from being 
obliged to keep by them. But this is the employment to which, 
where banking is properly conducted, bankers devote their whole 
funds, and by this mode of reckoning the saving effected by them 
in Scotland might be made to appear equal to thirty millions of specie. 
Were banking, however, as a distinct business, totally abolished 
in that country, the event certainly would not bring into it thirty 
millions of specie. The effects produced by such an event would 
consist in a diminution of the number of exchanges, and, con- 
sequently, of the division and subdivison of employments, and of 
the capacity given to materials, the transaction of many exchanges 
by barter, and the generalization of a large amount of them by 
transfers from hand to hand. Specie would only come in, in suffi- 
cient abundance to make up the balance. 


* Book II. c. ii. 
t Page 188. 


NOTES. 


411 

To conclude ; in my opinion the notion from which Adam Smith 
sets out, and which, since his time, has kept possession of all specu- 
lations on this subject, and been the foundation of many important 
practical measures,* is essentially erroneous. According to him, 
there is always a certain sum of money necessary to carry on the 
transactions of every society, the amount of which is proportioned 
to the transactions carried on. This is termed the circulating 
medium, and, whether it be bank paper, or specie circulated by the 
banker, or coin used for the purposes of exchange where there is 
no bank, it is reckoned always in quantity proportioned to the 
transactions carried on. On the contrary, it seems to me, that 
when once a bank is established in any community, the money 
circulated among those who are its customers, serves merely the 
purpose of counters for arranging their transactions, performing the 
same part as a multiplicity of checks, operating upon their several 
accounts, might accomplish. It is not a fund kept for making ex- 
changes, but an instrument applied for, at the time exchanges are 
to be made, and operating upon the real fund kept for that purpose, 
the claim, viz., which the bank has on the general stock of the 
community, the specie deposited in its vaults, and the other items 
making up its capitol, which, like the coin in the old deposit banks 
of Italy and Holland, constitute that part of the general stock, 
really performing the function of exchange. 

If this be the case, it follows that the more perfect as an art bank- 
ing becomes, th£ less, other circumstances being equal , is the amount 
of the circulating medium required, and the greater the saving to 
the community. It also follows, that a system of banking considered 
merely as a means of transacting exchanges taking place in the 
ordinary course of affairs, within the community, approaches nearest 
to the excellence of art, when it most effectually secures its funds 
from being squandered, and when the counters employed by it in 
its operations, issue from it, pass through the hands of its customers, 
and find their way back to it most easily and quickly. The former 
circumstance diminishes the risk of loss from the mode of effecting 
exchange, the latter diminishes the expense of it. 

It may farther be observed that the popular notion, that the ad- 
vantages of banking are limited to the substitution of paper for 
specie, and the creation to that amount of a fictitious capital, 
is altogether erroneous. The advantages derived from this 
source are rather contingent, than essential. They fall chiefly to 
the banker, and, as he may be considered as a broker having the 
care of the funds of certain of the lenders of the community, for 
the purpose of distributing them among the borrowers, and having 
to be paid for the trouble, the expense, and the risk of loss attending 
his business, this mode of paying him may be the most convenient 
that can be devised. The real advantage however of the art, arises 
from its application of the floating loans of the society to the pur- 


* As for instance, the contraction of issues by the bank of England in 1826, 
(the immediate cause of the disasters of that year,) and the legislative enact- 
ments on British currency for the last twenty years. 


412 


NOTES. 


poses of exchange ; and, instead of the paper money issued being 
the cause and the measure of the good derived from it, the less the 
quantity of such money, in proportion to the business transacted 
with it, the smaller the expense of the business of exchange to the 
trading community, and the greater the benefits the banker bestows 
on it. And, again ; in cases where bank paper makes the general 
currency, instead of the partial or total abolition of banking, only 
requiring the substitution of a quantity of specie, equal to the paper 
withdrawn from circulation, it would, in proportion as it were partial 
or total, compel the substitution of a much larger quantity of specie, 
or a proportional diminution of the exchanges before transacted, 
and, in either case, would place the instruments belonging to the 
society in more slowly returning orders, lessen the amount of mate- 
rials within reach of the accumulative principle, and eventually 
occasion a proportional diminution of the national stock. 


H. Page 249. 

Since the passage in the text was written, the art of the applica- 
tion of steam, as an agent in transport by water, has made a farther 
step. It consists in a passage of the engine used in land carriage, 
to that used in water carriage. Besides this, however, the germ of 
some other principles has appeared, which, it seems probable, will 
ultimately produce a great and important revolution in the art. It 
is remarkable, that the site of this event is also the Hudson. 


I. Page 276. 

I have seen many of the Indians in Canada, when in high dress, 
clothed in the finest English cloth, of which they are, I am told, 
excellent judges ; certainly, however, in the way they wear it, the 
indian blanket, one made thick for the purpose, with a broad blue 
border, makes a more convenient and more becoming robe. The 
almost irresistable passion which these people have, for whatever 
they perceive esteemed precious by others, must have struck every 
one having had any intercourse with them ; perhaps the following 
anecdote may be worth relating, as in some degree illustrative of it. 
I was once voyaging with a friend in a small canoe, when we 
chanced to keep company for two or three days with some Indians 
in another, one of whom a severe intermittant had reduced to a 
mere skeleton. One forenoon when we stopped for a little, they 
requested us to come close to them, and open a case we had, to 
let the sick man examine it. Having done as they desired, the 
invalid seemed sadly disappointed. “ I thought,” he said, “ when 
I saw it at a distance yesterday, that the inside was silver, and it 


NOTES. 


413 


seemed to me it would do me good to look at it, but it is only tin/' 
The expression of his countenance and voice showed that he fan- 
cied the sight of so much silver, would have acted like a cordial, 
and so I dare say it would. It is to be observed that it is not the 
custom of Indians to make requests having an air of impertinence 
of strangers, or to express disappointment. 


J. Page 285. 

A gentleman of my acquaintance, who had been long among the 
Indians, and ranked among them as a brother warrior, once travel- 
led a great distance in the far interior to visit a chief. His friend 
received him in the spirit of hospitality natural to the red man. In 
proof of it, he declared he would feast him, as he had seen white 
men feasting their friends, — for he too had been a traveller. Ac- 
cordingly, his “womankind” not being adequate to the task, he 
set about cooking and serving dinner himself, and, considering all 
things, succeeded wonderfully. As imitators, however, will often 
copy rather defects than merits, so the relish of the repast would 
have been somewhat improved, by his memory having been a little 
less tenacious of a few, of what doubtless seemed to him the strange 
ceremonies of the white men. For example; he had seen at the 
houses of some of his white friends, their young men employed 
rubbing the dishes, off of which the guests ate, with a small square 
piece of cloth. Now, the only piece of cloth, like this, which he 
happened to have, formed an article of dress in use among the In- 
dians, but unknown, and undescribable by modern Europeans. It 
seems, notwithstanding, to have been in use among their ancestors, 
being, if I mistake not, that very garment, of which Ulysses threat- 
ened to strip the unhappy Thersytes, the day he made him feel that 
he did not bear the sceptre in vain. 

T & TCud(b 

To divest himself of it, was no doubt an inconvenience, but this 
was not to be reckoned in the service of a guest. Accordingly, hang- 
ing it over his arm, he rubbed his visitor’s platter with it very care- 
fully, at every change. My friend had nothing for it but to honor 
the care of his host by eating gravely and abundantly. Had he 
done otherwise, the chief, who was himself the most polite of men, 
would have regarded it as an unpardonable grossierete. 


K. Page 345. 

Perhaps it may be said, that the strictness of the inductive method 
can only apply to the sciences treating of mere matter and its affec- 
tions. This were to declare the same thing to be, and not to be, a 


414 


NOTES. 


science of experiment, and is besides in opposition to the authority 
of the founder of the inductive philosophy. 

“Etiam dubitabit quispiam potius quam objiciet; utrum nos de 
naturali tantum philosophia, an etiam de scientiis reliquis, logicis, 
ethicis, politicis, secundum viam nostram perficiendis loquamur. 
At nos certe de universis haec, quae dicta sunt, intelligimus : Atque 
quemadmodum vulgaris logica, quae regit res per syllogismum, non 
tantum ad Naturales, sed ad omnes scientias pertinet ; ita et nostra, 
quae procedit per inductionem, omnia complectitur. Tam enim his- 
toriam et tabulas inveniendi conficimus de ira, metu , et verecundia, 
et similibus : ac etiam de exemplis rerum civilium ; nec minus de 
motibus mentalibus memories, composition is et divisionis, juclicii, et 
reliquorum ; quam de caliclo et frigido , aut luce, aut vegetations , 
aut similibus.” Nov. Org. Lib. I. c. cxxvii. 


\ 




ERRATA. 

Page 30, line 26 from top, for “ members ” read numbers. 

“ 32, “ 9 “ for “ more ” read from. 

“ 111, “ 28 “ for “ C” read c. 

“ 164, “ 8 “ for “ divided ” read directed. 

“ 269,“ 11 “ for “ content ” read constant. 

“ 354,“ 2 “ for “ rapidit y ” read security. 

In pages 349, 350, only part of Mr. Storch’s opinions on the subject of Ireland are quoted. 
There ought to be asterisks to mark the omissions. 






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